ISF 261 

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Copy 1 



MILK PRODUCTION 
COST ACCOUNTS 

PRINCIPLES AND METHODS 



BY 

CARL W. LARSON 



Submitted in Partial Fulfilment of the Requirements 

FOR THE Degree of Doctor of Philosophy, in the 

Faculty of Pure Science, Columbia University 



COLUMBIA UNIVERSITY PRESS 
1916 



MILK PRODUCTION COST ACCOUNTS 



COLUMBIA UNIVERSITY PRESS 
SALES AGENTS 

New York: 
LEMGKE & BUECHNER 
30-32 West 27th Steeet 

London: 
HENRY FROWDE 
Amen Corner, E.G. 



MILK PRODUCTION 
COST ACCOUNTS 

PRINCIPLES AND METHODS 



CARL W.'^ARSON 



Submitted in Partial Fulfilment of the Requirements 

FOR the Degree of Doctor of Philosophy, in the 

Faculty of Pure Science, Columbia University 



COLUMBIA UNIVERSITY PRESS 
1916 



SFs.(, 
■U3S 



Copyright, 19 16 
By Columbia University Press 



Printed from type, August, 1916 



rue Uui^ersltf 
OCr 28 ttH6 



PREFACE 

The growing interest in the cost of producing milk is largely- 
due to the increase in price during the past few years. State 
and Federal experts have studied the problem, and Extension 
and County agricultural workers, city chambers of commerce, 
special committees appointed by citizens, boards of health, and 
other municipal organizations and ofl&cers are devoting con- 
siderable effort to the study of milk cost. 

There is considerable unrest in the dairy industry: The 
producer commonly is not satisfied with the price he receives, 
the dealer feels that he is receiving no more than his share of 
the final price for the class of milk and the service demanded 
by the consumer, and the consumer objects to the increase 
that from time to time is made in the price of milk. In gen- 
eral, the production and the sale of milk are not on a sound 
economic basis, and the method of cost computation discussed 
herein is offered as a step toward establishing sound and equi- 
table conditions. It is hoped that it will at least lead to a 
standard method that may be used generally and that it may 
afford opportunity for comparisons. This study only deals 
with the problem from the standpoint of cost of production, 
and does not include the subject of distribution, which con- 
stitutes a problem of perhaps equal importance. 

In the many bulletins and reports extant on the cost of 
producing milk, no two of them follow the same plan; even 
different reports from the same experiment station have been 
worked out under systems that make comparisons impossible. 
The various writers are not agreed on the relative importance 
of the different factors involved and the methods of handling 
them. In this discussion an effort is made to analyze each 
item of cost and also to apply the methods and practices of 
recognized authorities in factory cost accounting as far as they 
may be applied to milk production cost. 



VI PREFACE 

The idea of pre-calculating feed costs has, as far as is known, 
never been suggested before. At first thought it may seem im- 
practical. Nearly all scientific and successful practical feeders 
of dairy cattle, however, have full confidence in the reverse 
of the formula recommended herein. On a basis of the re- 
verse of the formula, or with some other standard, they com- 
pute the feed requirements of their cows. The value of a 
method for pre-calculating costs is obvious. Without it milk 
costs are only history, and when finally computed are not 
applicable under changed prices of feed. The value of the 
method suggested herein is that by the use of it cost may be 
determined at any time. It is only necessary to know the 
kind and prices of feed. With the systems now in general 
use the records of milk costs merely show what the cost has 
been and may not apply when one feed has gone up in price 
and another down. The author is looking to the ideal condi- 
tion when we shall be able to figure milk prices as accurately 
as the modern shop manager who, given the prices of material 
and labor, can figure to a fraction of a cent the cost of pro- 
ducing certain articles. The formula used herein is based on 
Armsby ^ Energy Tables and Maintenance Standard, com- 
bined with Eckles 2 Milk Standards. 

The author is aware of the fact that there is some differ- 
ence of opinion as to which feeding standard is most nearly 
accurate, and the standard here used may be changed slightly 
without seriously affecting the use of the method. Such modi- 
fication as the user wishes to make or finds desirable may be 
applied with little change of formula. Even another standard 
or basis of food requirement may be used. The Feed Unit 
System with the Scandinavian Feeding Standard may easily 
be substituted. This system would be even more simple and 
would no doubt give satisfactory results. The Energy Method 
is used because it is growing in favor in this country at the 
present time and has given excellent results in practice. 

It is thought the discussion of other items of cost will not 
only serve the purpose of furnishing a method of cost estima- 

^ U. S. Department of Agriculture, Farmers' Bulletin No. 346. 
2 Missouri Agr. Exp. Sta., Research Bulletin No. 7. 



PREFACE Vll 

tion, but will show where increases or decreases come about, 
the effect of increase in the price of labor on final cost, or 
perhaps where costs may be reduced in one item or another. 
The author wishes to acknowledge the helpful advice and 
criticism of Professor O. S. Morgan. He also is grateful to 
Helmer Rabild for data on the ages of cows. 

CARL W. LARSON. 
New York City 
March, 1916. 



CONTENTS 

PAGE 

Preface v 

Introduction xi 

CHAPTER 

I. The Functions of a Cost System i 

II. The Cost of Feed 6 

III. The Cost of Labor 19 

IV. The Cost of Buildings 24 

V. The Cost of Cattle 27 

VI. The Cost of Bedding 38 

VII. The Cost of Sire 40 

VIII. Miscellaneous Expenses 43 

IX. Credit for Calves and Manure 46 

X. Application and Use of Formula 51 

Bibliography 55 



INTRODUCTION 

The efficiency wave that has gone through our factories in 
recent years is reaching the farms and dairies of the country. 
Because of cheap land and the great natural fertiUty of the 
soil, because new lands have been opened up almost every 
year, and because the farmers have been able to succeed with- 
out efficient management, they have been the last to make a 
systematic study of operation and cost of production. Cost 
determination is essential to efficiency. It not only furnishes 
a guide to a profitable selling price, but also enables the pro- 
ducer or manager to direct and control the different factors of 
cost. A complete and properly arranged cost statement en- 
ables the dairyman to study and to compare methods and 
finally to determine by which method milk can be produced 
most cheaply. 

Milk is one of the most important of our agricultural prod- 
ucts. There is no substitute for it, and it will always be in 
demand. Such proper adjustment as will encourage the dairy 
industry must and will be made. The consumer eventually 
will pay the producer a reasonable profit. The results of 
surveys and studies of cost estimates, however, indicate the 
existence of rather startHng conditions. Some of these are so 
significant that it may be appropriate to quote at some length 
from the discussions of conclusions made by men who have 
studied. the concrete situation. The most sweeping statement 
is made by Professor J. B. Lindsey,^ who, in discussing the 
results of an experiment covering 15 years, says: 

"It is very evident from our own figures and from those derived 
from other sources that under present conditions it is not satisfac- 
tory business to attempt to produce reasonably clean milk under 

1 Massachusetts Agr. Exp. Sta., Bulletin No. 145, pp. 20-21. 



XII INTRODUCTION 

the most ordinary conditions for less than 5 to $2 cents per quart 
at the farm. In fact, it is doubtful if practical business men would 
consider it as a business undertaking unless they were able to se- 
cure a price per quart for their milk at least 10 to 20 per cent in 
advance over the cost of production. 

"The cost of production naturally would be considerably in- 
creased if the producer invests capital in a modern barn and well- 
equipped dairy house, if his farm is located where taxes or labor is 
high, if he purchases nearly all of his feed, if he employs a super- 
intendent or charges a reasonable sum for supervision, or if he 
makes an inspected or certified product. 

"Why has the producer received so low a price? It is the belief 
of the writer that in the past a great deal of milk has been made 
and sold for less than the cost of production. In making an attempt 
to gain a temporary livelihood from dairying, many have sacrificed 
the fertility of their farms, employed the most primitive methods 
of housing and caring for the dairy stock, while the family have 
cared for the milk and dairy utensils without credit. The dairy- 
man has forgotten or neglected to estimate his time at a fair value 
and to take into consideration the cost and depreciation of barn 
tools, dairy utensils, and such perishable foods and supplies as 
brushes, salt, soap, ice, bedding, bull service, veterinary services, 
and the like, all of which are absolutely necessary. In other words, 
the keeping of accurate accounts and the application of the ordi- 
nary business methods have been too often neglected. Such methods 
on the part of the producer as against the organized business method 
of the contractor have resulted in a measure at least in the estab- 
lishing of a relatively low wholesale and retail price. 

"Now that health authorities are with right demanding better 
dairy methods, the producer is indeed confronted with a serious 
problem, namely, how to conform to modern sanitary requirements 
in the face of the increased cost of labor, grain and tools and pro- 
duce milk at a reasonable profit. He is meeting this problem at 
present in a negative way, by selling his cows and trying to turn 
his attention to other lines of agricultural industry." 

Dr. A. L. Thompson/ in discussing the results of his inves- 
tigations of cost of producing milk on 174 farms in Delaware 
County, N.Y., is almost as skeptical of the dairy business. 
He found that: 

1 New York Agr. Exp. Sta. (Cornell), Bulletin No. 364, pp. 140-141. 



INTRODUCTION Xlll 

"There were fifteen herds, or about one herd in eleven, that 
showed a profit. There were forty-six herds, or about one in four, 
that produced milk for $2 or less per hundredweight. At the prices 
of feed, labor, and use of capital figured, the average cow in Dela- 
ware County failed by $32.14 to pay expenses. To state the results 
in another way, the average cow paid all costs excepting the value 
of hay and forage that was raised on the farm. For this hay and 
forage the cows paid 28 per cent of its farm value. 

"Some farmers keep unprofitable cows for the sake of having 
manure to use on their land. If the use of this manure is the cheap- 
est means of building up. the land, the system is justified, but it 
is possible for the manure to cost more than it is worth. With 
the foregoing valuations for labor, feed, and use of capital, in order 
to have prevented a loss on the dairy enterprise in 191 2 manure 
would have had to be worth $6.85 per ton in the barn. The crops 
generally grown in the County — corn, oats, millet, and hay — do 
not justify paying such high prices for manure. . . . 

"The question might be asked, how do these farmers live when 
they sell hay to cows at a lower figure than its farm value, or when 
they work for lower wages than the rates indicated, or when they 
accept a lower rate of interest than 5 per cent. The dairymen of 
Delaware County are doing one or more of these things." 

Although the author does not agree fully with these con- 
clusions, they emphasize in a forceful way the importance of 
a thorough study of the whole subject and especially the need 
for a uniform basis and a correct and fair method of cost 
accounting so that the industry may be placed on a sound 
economic plane. Although as a rule little study is made of 
costs on the farms of the United States, still adjustment does 
take place. As soon as the price of milk becomes a little 
greater than the cost of production, land and cattle advance 
in price.. The adjustment is not always immediate, but when 
net returns of the farms or bank accounts show that the in- 
dustry is profitable in some cases, others extend their farm 
operations to include dairying. 

In pointing out some of the items of cost that it is thought 
other writers should not have included, the author is not 
doing so for the purpose of defending the consumer and some 
dealers who attempt to keep the price down, but if possible 



Xiv INTRODUCTION 

to determine a fair and definite method of cost accounting 
that will be generally accepted. The different items are dis- 
cussed separately. 

A cost method is important to the individual producer in 
showing whether his dairy is profitable, whether some opera- 
tion costs more one year than another, and possibly in sug- 
gesting some means of producing milk more cheaply. A defi- 
nite and correct system, used as a standard, should make it 
possible to compare costs in different sections of the country, 
and eventually to determine a price that will be fair and 
reasonable to the producer and at the same time satisfy the 
consumer that he is paying only what is equitable for the 
capital, labor, and other expense necessary to produce milk. 
Rough estimates and errors have the opposite effect. 

Although in a great many localities surveys show an actual 
loss in dairying when all costs are included, still the dairymen 
usually are successful farmers, and dairy sections and dairy 
communities are almost without exception prosperous. This, 
of course, may be difficult for the consumer to understand. 
Dairymen who are making a special product and getting a 
special price for it are in most cases satisfied, but in those 
communities where conditions show the dairy industry to be 
unprofitable, there are several reasons why dairymen continue 
in the business: 

1. On account of changed conditions some are producing 
^rnilk at no profit or at a loss. An improved method of ship- 
ping milk may be a factor in this. A dairyman who lives near 
a city is able to sell his straw, stover, and other feeds at a 
higher price, and perhaps also his labor is high priced. With 
improved facilities of transportation he is obliged to compete 
with a farmer who occupies cheaper land and who places low 
values on his coarse feeds. 

2. There are those who are satisfied to produce milk at 
actual cost in order that they may get some return for labor 
that they could not use without the dairy. , To illustrate — 
assume that there are two farmers, each with i6o acres of 
equally good land, one having lo cows and the other none. 
Now we may suppose that the farmer with the lo cows sells 



INTRODUCTION XV 

his milk at exactly the price that careful and accurate records 
show it to cost. Figuring roughly that labor was charged at 
$30 per cow per year, the farmer with 10 cows would then 
have $300 more than his neighbor at the end of the year, for 
he would spend no more for his labor. In the summer his chil- 
dren are at home and do the milking, and during the winter 
it can be done by the farmer himself. He is therefore $300 
better ofif at the end of the year than his neighbor. Some 
contend that this is a division of labor, others that it has 
nothing to do with the actual cost of milk. It is nevertheless 
one of the important reasons why some dairy farmers are 
apparently more prosperous than those on similar farms and 
without cows. 

3. Some dairymen have land which can not be used for 
anything except pasture, or have -stover or inferior hay and 
other feeds that can be utilized for milk production, but that 
could not well be marketed. 

4. There are those who found the milk business profitable 
when feed, labor, and other expenses were cheaper, and although 
their price for the product may not have advanced in the same 
proportion as cost, still they continue in the industry in the 
hope that they will eventually get a higher price for the milk. 

5. With some farmers a few cows fit in well with the gen- 
eral farm scheme. To this class belong those who have a 
little pasture, those who want a certain quantity of manure 
for a particular crop, and those who want a certain small 
cash income throughout the year. It is the farmers with 
small herds, more than any others, who produce the bulk of 
the milk of this country, and keep the price low. 

The above reasons are not given to justify low prices of 
milk, but rather to explain why some are producing milk 
although when all actual costs are counted the business does 
not show a profit. 



MILK PRODUCTION COST 
ACCOUNTS 

CHAPTER I 

THE FUNCTIONS OF A COST SYSTEM 

A COST system has for its object not only a direct benefit to 
the particular dairyman who keeps accurate cost accounts, but 
also an indirect benefit to the public by making it possible to 
put the dairy business on a sound basis throughout the 
country. 

The ends to be attained by a system of cost accounts for 
milk production are: 

1. To regulate selling price. 

2. To detect, locate, and eliminate waste in material, labor, 
and other expenses incident to production. 

3. To change any operation and determine the actual effect 
on cost. 

4. To enable the manager to direct the work with greater 
efficiency. 

5. To make it possible to standardize the work. 

6. To compute costs at different times and under different 
conditions. 

7. To provide reliable statistics for comparisons and studies 
in different States and locaHties. 

Almost every dairy in the United States is a part of a gen- 
eral farm proposition, and without cost accounts for the dairy 
itself it is impossible to determine to which enterprise profits 
or losses are due. Although a dairy farmer may be getting a 
fair interest on his capital and a fair wage for' his labor, sur- 
veys or cost records of his dairy often show that the profits 
are not derived from the cows. When the feeds are figured 



2 MILK PRODUCTION COST ACCOUNTS 

at prices at which they could be disposed of and the labor 
is actual extra labor that must be paid for, it would of course 
prove that profits are derived from the farm rather than from 
the herd. This should prompt the dairyman to be more care- 
ful in his cost estimates and endeavor to learn where his vari- 
ous items of cost are higher than they should be, or higher 
than formerly, and to look for a remedy. It may be that a 
different ration would be less expensive, perhaps fewer or more 
cows should be kept or perhaps the cows are poor producers. 
The cows may be kept on too expensive pasture, or not pas- 
tured enough; perhaps the farmer could buy cows cheaper 
than he can raise them, perhaps he keeps calves too long or 
he may be vealing calves at a loss. Where the feed prices are 
figured on a basis of sale or market price or the price at which 
they could be purchased in the community, it may be found 
that it would be more profitable to market the crops in the 
raw state instead of through the dairy. Labor also in some 
localities makes it unprofitable to produce milk. Again, many 
dairies are over-capitalized. 

These are only suggestions of some of the factors which 
may not be known unless cost accounts are kept. The effi- 
ciency of individual cows is, of course, of great importance; 
cows of the same size require about the same feed for main- 
tenance,^ so that a cow that produces 6,000 pounds of milk 
annually produces it more cheaply per pound than a cow of 
equal weight that produces 3,000 pounds. 

The production cost will be discussed under three main di- 
visions, the feed expense, expense for labor, and indirect expense, 
the "overhead," or indirect expense being further subdivided. 
The following outline indicates the method of treatment: 

1. Feed. 

2. Labor. 

3. Indirect expense, or overhead. 

a. Buildings. 
h. Cattle. 
c. Bedding. 

1 "A Study of the Cause of Wide Variation in Milk Production by Dairy 
Cows," Ekles, University of Missouri, Research Bulletin No. 2, p. 146. 



THE FUNCTIONS OF A COST SYSTEM 3 

d. Sire. 

e. Miscellaneous. 

The credit items which should be deducted as special credits 
in order to determine the net cost of production are as follows: 

1. Calves. 

2. Manure. 

The diagram below is given to show the relation of cost 
items to net cost of production, under certain conditions. The 
feed and labor costs are spoken of as prime costs, and they 
constitute about 90 per cent of the total cost of production. 







Indirect 




Returns for 


♦ 




expense. 

(10%) 




manure and 
calves. 




Labor 








cost. 










(20%) 














Production 


Net cost of 








cost, not in- 


production, 








cluding dis- 


without 






(Prime 


tribution or 


profit. 






cost). 


profit. 




Feed 










cost. 










(70%) 











This diagram is given simply to show the cost factors and 
approximately their relative proportions to the total cost under 
particular prices and conditions, and although it represents 
actual conditions in some sections at the present time, it is 



4 MILK PRODUCTION COST ACCOUNTS 

not the purpose here to show average conditions. Instead of 
attempting to give any average cost, the author wishes to em- 
phasize the fact that costs vary greatly and are determined 
by certain definite conditions. It is no more reasonable to 
say that it costs five cents to produce a quart of milk than to 
say that it costs five cents to make a box. The manufacturer 
of boxes before stating a price asks the size of the box, the 
kind of material to be used, whether the sides are to be planed, 
whether the box is to be made and used in the lumber and mill 
region of Washington State or in New York City, and also 
whether lo boxes are to be made in spare time or 10,000 made 
at once. Likewise the milk producer should ask in quoting or 
estimating a price whether it is for 3 or 5 per cent butter- 
fat milk, whether it is to be produced from tuberculin-tested 
cows and in clean barns by clean labor working under clean 
methods or by any cows and without particular care in pro- 
duction, whether it is to be produced where hay is worth $10 
per ton or $20 and grain $25 or $35, whether conditions are 
such that the cows must be kept in the stable all or nearly all 
the year for lack of pasture or whether they can feed on grass 
six or more months of the year, and perhaps on land unfit for 
other crops. It should also be known whether it is a price 
for a small quantity produced as a side line or for a large 
quantity produced as a specialty. It is to get at these very 
items of cost, etc., that a cost system is needed. 

The above diagram applies where an intensive feeding sys- 
tem is practiced — that is, where considerable grain is in- 
cluded in the ration. Where summer dairying is the practice 
and where roughage forms a large part of the feed the pro- 
portion of labor and indirect cost of production would be 
greater. Also, in regions where intensive systems are prac- 
ticed and a soiling system is followed the feed may cost less 
and labor more. Expensive cattle and buildings increase the 
proportion of indirect cost. The over-capitalized dairies are 
shown by the amount of overhead cost. Some cows are bought 
at such high prices and housed in expensive buildings that no 
system of feeding, no possible production, and no reasonable 
price for the milk could make them profitable. 



THE FUNCTIONS OF A COST SYSTEM 5 

There is even greater direct benefit from keeping records 
of costs in milk production than in other lines. The most im- 
portant records and the ones that require most time to keep 
are absolutely necessary to intelligent feeding. It is necessary 
for a feeder of milch cows to know just how much each cow 
consumes and how much milk results. He must have a record 
of previous days. Records of the weight of the milk together 
with the weight of feeds make accurate and efi&cient feeding 
possible. The statement that one can no more feed a cow 
intelligently without a record of production each day and of 
the weight of feed than a fireman can attend a boiler without 
a steam gauge is true. It is economy to increase coal if the 
boiler responds with sufficient increase of steam power, but 
there is danger if too much coal is used. With a cow it is 
profitable to increase the feed as long as she responds with a 
sufl&cient increase in milk, but there is danger of over feeding 
and "throwing the cow off feed." The most profitable pro- 
duction of a cow is only secured by intelligent feeding and a 
careful study of the milk and feed records, and it is these 
records that form a large part of those necessary in milk cost 
accounting. 

The amount of time required to keep these records is slight. 
A milk scales near the milk tank, and a simple chart with the 
cows' names or numbers and blanks for the different days are 
all that is needed for the milk records, and the same scales 
and a very similar feed chart can be attached to the feed bin 
or cart for keeping a record of the quantity of feed used. The 
other items of cost can be kept with even less labor. An 
occasional weighing of the bedding, simple labor records, and 
records of expenditures for special apparatus cover the other 
chief factors of cost that require definite and special accounts. 
These data can be calculated with little trouble. 

The standards given are offered only as a guide, and although 
local conditions may, for example, make it possible to bed the 
cows more cheaply with sawdust than with shavings or straw, 
the relative amounts given will apply, and when other ma- 
terial is substituted in the formula the actual cost may still 
be given. 



CHAPTER II 

THE COST OF FEED 

The largest and most important item of cost is the feed. 
This varies greatly with different cows and with different 
methods of feeding. The kinds of feed used, the amounts 
consumed, and the cost have a marked influence on the total 
cost of producing milk. 

One of the first questions met with is whether feed should be 
charged at cost of production or at market price, the market 
price, of course, being considered as the price at which it could 
be purchased. There is considerable difference of opinion as 
to which cost should be used. Hawkins ^ in discussing this 
from the factory standpoint sums up his conclusions as follows: 

"The advocates of cost price claim that by means of it they 
show the actual cost of manufacture and not what might have 
been the cost, and that it does not interfere with the balancing of 
the stores accounts in money value. Those who uphold market 
price claim that it furnishes a sounder basis for estimating and for 
competitive purposes by dealing with actual value rather than with 
former value, and that it rightly causes the effect of fluctuations to 
be seen in the stores accounts rather than in the job accounts, so 
that profits or losses due to chance or speculation are distinguished, 
as they should be, from ordinary trading results." 

In the production of milk it is a question whether the cost 
of producing the feeds on the farm or the price they could 
be sold for on the market should form the basis of cost cal- 
culation. Unless the latter is used as the basis, the dairy cost 
accounts may be lost in the profits or losses in the farm oper- 
ations. If the cost of production price is assumed a difference 
in cost of milk production may be more influenced by the cost 
of production of the feeds than any other factor, and besides 

1 " Cost Accounts," L. W. Hawkins, p. 78. 



THE COST OF FEED 7 

it is the profit of the dairy that is directly the result and 
purpose of these accounts. Also, if based on cost of produc- 
tion there is no profit for the work one puts in the production 
of these feeds. If the production cost of feeds is high on a 
particular farm it is reflected in the dairy accounts, and if by 
efl&cient management of the farm the feeds are produced cheaply, 
then the dairy receives undue credit. Pouli ^ in his studies of 
milk cost in Switzerland says: 

"By the introduction of the market price we want to exclude the 
effect of variation of production cost ... so as to arrive at con- 
clusions applicable to the general and average cost on the individ- 
ual farm, we have then seemingly objective, but in reality also 
varying estimates of prices, which can lead to the above variation 
of prices. If we add to this the deviation of other expenses, then 
we get varying conclusions of average cost, although the price rate 
will correspond to the local or temporary circumstances, in the 
estimates of the cost of milk production." 

When the dairy is considered separately from the farm, 
there is no doubt that it should be charged with feeds at 
market prices, but when the dairy farm is small or where the 
dairy is distinctively a necessary part of the whole farm scheme, 
then perhaps the cost price could be used. In an interview 
with Mr. Nicholson, an authority on cost accounting,^ he 
stated that it was his practice in large plants that have sev- 
eral departments to charge material from one to another at 
market price, but with small plants actual cost of materials 
is used. 

In figuring feed costs there are several important points to 
keep in mind; the following will be discussed: 

1. The proportion of roughages or coarse feeds. 

2. The amounts of roughage. 

3. A balanced ration. 

4. Amount of pasture. 

5. Feed for maintenance. 

6. The quantity and quality of milk produced. 

1 Produktionskostenberechungen, Archiv fiir Exakte Wertschaftsforschung, 
Erg. 7. 

"^ " Cost Accounting, Theory and Practice," J. L. Nicholson. 



8 MILK PRODUCTION COST ACCOUNTS 

Methods of feeding and balancing rations are not discussed, 
except in so far as is necessary for an intelligent use of the 
formula or method of pre-calculating costs of feed. 

The amount of roughage that a cow will eat depends largely 
upon the kinds used and upon the size of the cow, also to 
some extent upon the amount of other feeds or grain used. 
Some cows are fed little grain, and must depend almost en- 
tirely upon roughage for maintenance and milk. Such cows 
can not produce a maximum for a long period, especially if 
they have the ability to produce large quantities of milk. 
When good silage and alfalfa hay are fed fairly large yields 
may be secured. Good silage contains considerable corn, but 
careful feeders have found it advantageous to add some grain 
to the above ration. As a guide in computing roughage, the 
following rule is offered: To determine how much hay to feed, 
multiply the weight of the cow in hundreds of pounds by 0.6 
and it will give the amount in pounds of hay. For example, 
a 1,000-pound cow equals 10 hundred pounds, so that follow- 
ing the rule 10 would be multiplied by 0.6, giving 6 pounds of 
hay. To calculate the silage to feed, multiply the weight of 
the cow in hundreds of pounds by 2.5. A 1,000-pound cow 
then would be fed 25 pounds, and a 1,200-pound cow 30 
pounds, etc. 

Of all the items of cost, the pasture is most important, 
though it has little mention in most previous writings on cost 
records. Its importance is pointed out by Cooper,^ however, 
who says: 

"The importance of pasture in the economy of the farm is illus- 
trated by the small quantity of grain or roughage fed during the 
pastural season . . . for practically 5 months out of each year the 
cattle were supported almost entirely from the grass crop." 

Warren ^ says: 

"Pastures furnish our cheapest feed. The pasture of one cow 
one day costs 3 to 6 cents, hay or hay and silage 12 to 15 cents, 
grain 12 to 15 cents. A good pasture will replace all of the hay 

1 Minn. Agr. Exp. Sta., Bull. No. 124, p. 97. 

2 N. Y. Agr. Exp. Sta. (Cornell), BuU. No. 280, p. 355. 



THE COST OF FEED 9 

and much of the grain. Pasture produces more milk than other 
feed at one-fifth to one-tenth of the cost." 

The amount charged for pasture varies with different in- 
vestigators, as for example Hooper and Robertson ^ suggest 
$1 to $1.50 per month, Rasmussen - 25 cents to $1 per month, 
Lindsey ^ 5 cents per day, Thompson^ $4.29 per cow and 
accompanying stock for the season, and WoU ^ $5 per season. 
At these prices the cost while on pasture is very much cheaper 
than if the cows were fed in any other way. It shows, how- 
ever, how important a factor the pasture is in calculating feed 
costs and the importance of indicating in cost records the part 
of the feed secured from pasture. Tables given by Woll on 
pages 71 and 74 show how valuable pasture is to a dairyman 
when it costs no more than $5 per season, as he has estimated. 
The best Holsteins secured 1,153 ^^ed units, or one-eighth of 
all the feed units consumed from grass, while the best Jerseys 
secured 1,506 units, or one-fourth. The total cost of feed for 
the former was $99.23, and for the latter $80.06, and the pas- 
ture furnished one-eighth of the units for the Holsteins and 
one-fourth for the Jerseys at a cost of only $5, Good pasture 
will supply 10 feed units per day,^ and a unit is based upon 
the equivalent in feeding value of a pound of corn. When 
corn, therefore, is worth i cent per pound a dairyman can 
afford to pay 10 cents per day, or $3 per month for good pas- 
ture rather than feed his cows in the barn on feed of equal 
cost. It should be said, however, that a high-producing cow 
can not get enough feed from pasture to keep up her flow and 
maintain her weight. When pasture is charged at a definite 
price per month or season the economy of production favors 
the smaller producer. Cows giving large amounts of milk 
need some concentrated feeds in addition to pasture. 

In pre-calculating costs, therefore, the amount of time on 
pasture must be determined, and the time the cows are on 

1 N.Y. Agr. Exp. Sta. (Cornell), Bull. No. 357, p. 140. 

2 New Hamp. Agr. Exp. Sta., Ext. BuU. No. 2, p. 4. 
^ Mass. Agr. Exp. Sta., Bull. No. 145, p. 9. 

* N.Y. Agr. Exp. Sta. (Cornell), Bull. No. 364, p. 216. 
^ Wise. Agr. Exp. Sta., Research Bull. No. 26, p. 58. 
^ Wise. Agr. Exp. Sta., Circular No. 37, p. 6. 



lO MILK PRODUCTION COST ACCOUNTS 

pasture will depend, of course, upon the kind of pasture avail- 
able, location, and season. 

The next step is to arrive at a correct charge for the pasture. 
It has been customary in the past to use the figure for pre- 
vailing charge in community or simply a definite estimated 
amount. Thompson,^ however, bases the cost, with no profit 
from land, as follows: 

"Interest amounting to s per cent and taxes amounting to 0.5 per 
cent were charged on the actual value of the land in pasture. To 
these amounts were added all other costs, such as making and re- 
pairing fences, manuring, fertilizing, reseeding, mowing, and the 
like. The average value per acre was $19.41. The annual cost of 
this pasture was . . . $4.29 per cow and accompanying stock." 

With the accompanying stock deducted, the cost would 
have been approximately $3.50 for the season. The interest 
on the land was about three-fourths of the total cost, so that 
if high priced land were used the cost would be increased. 
This seems to be a satisfactory method for permanent pas- 
tures that can not be tilled, or land that for some other reason 
must be kept in permanent pasture. With land, however, that 
can be farmed a better method is to charge pasture at the 
rate per acre that it would return in hay, less the cost of 
making, storing, and marketing. The fairness of this method 
was pointed out by the great economist Adam Smith ^ more 
than 150 years ago. He said: 

"A great part of the cultivated lands must be employed in rear- 
ing and fattening cattle, of which the price, therefore, must be 
sufi&cient to pay not only the labor necessary for tending them, 
but the rent which the landlord and the profit which the farmer 
could have drawn from such land employed in tillage. " 

In establishing a cost for pasture the steps are (i) to reduce 
the pasture to a unit basis, that is, the number of acres needed 
per cow, and the months that a cow can be fed on such pas- 
ture, (2) to estimate the land rental, which should be charged 

^ New York Agr. Exp. Sta. (Cornell), Bull. No. 364, p. 126. 
^ " Select Chapters and Passages from The Wealth of Nations," Adam Smith, 
P- 133- 



THE COST OF FEED II 

on the basis of a legitimate interest on the value of the land. 
Five per cent is the basis used throughout this paper. All 
authorities do not agree that interest, or rent, should be charged 
on land that is owned. If interest were not charged on owned 
land, it would be better for the farmer to have his money- 
invested in good bonds which would return dividends and pay 
interest on a farm mortgage, and to include this interest in 
the farm cost, or rent. The interest must be borne by the 
owner of the land in some way, so that if it is not included in 
the cost, it must be deducted from the profit, (3) to estimate 
the general expense, which includes taxes, making and repair- 
ing fences, seeding or reseeding, and fertilizing. Pasturage, 
therefore, would be computed as follows: 

1. Value per acre multiplied by 5 per cent, which may be 
considered as rent. 

2. General expense, which on the average will be about $1 
per acre.^ 

3. Acres required per cow per season, or estimated on the 
basis of cost per cow per month. 

The formula for pasture cost where land is worth $50 per 
acre and would pasture one cow on two acres for 5 months 
would be as follows: 

Rent $2.50 

General expense i.oo 

Cost per acre $3.50 

Two acres per cow $7.00 

The cost of pasture for the season would be $7, or, on a 
basis of 5 months, $1.40 per month. 

Now having determined the items of roughage and pasture 
which have such an important effect upon the cost of produc- 
tion, the grain ration must be considered. This in turn is 
dependent upon the size of the cow, and has a direct relation 
to the quantity and quality of milk produced. 

The idea of the pre-calculated cost accounts for milk prob- 
ably will be accepted without question except in the part that 

1 N.Y. Agr. Exp. Sta. (Cornell), Bull. No. 364, p. 126; computed from 
Table V. 



12 MILK PRODUCTION COST ACCOUNTS 

undertakes to determine the feed costs. The feed cost is 
based on scientific feed-requirement standards, and it is assumed 
that, given the size of the cow and the amount and quality 
of milk produced, the amount of protein and energy necessary 
to maintain the cow and supply enough of energy and protein 
for the milk can be accurately determined. The first question 
naturally asked is, are all cows equally eflficient? They are 
not, because not all produce the same amount of milk, but 
those that produce the same quantity are practically equal in 
efiiciency. Stating this in another way, a cow of a certain 
size requires for maintenance practically the same amount of 
feed as any other cow of the same size, and the amount of 
food required per unit quantity of same quahty of milk is 
practically the same. The following are selected quotations 
from Eckles and Reed ^ in a careful study in milk production, 
and indicate their conclusions from digestion trial: 

"The digestion trial showed practically identical results." 

"The real cause of the difference in production was found to be 
in the amount of feed consumed above maintenance." 

"After deducting the maintenance required one cow produced 
milk as economically as the other." 

"The main difference between profitable and unprofitable dairy 
cows is not to be found in the coefficient of digestion, or in the 
amount of food required for maintenance." 

"The superior dairy cow is simply one with a larger capacity 
for using food above the maintainence requirement and one that 
uses this available food for milk production." 

It is obvious from these conclusions that of two cows of 
the same size the one that will produce the greater amount 
of milk is the more profitable, for the feed required for main- 
tenance is practically the same. Two cows, each producing 
lo pounds of milk per day, produce it at a greater cost than 
one of the same size that produces 20 pounds. This is im- 
portant in figuring feed costs. 

When it is agreed that we have feeding standards that can 
be relied upon for determining the requirements of cows, it 
is certainly reasonable to use them in calculating feed costs. 
1 Missouri Agr. Exp. Sta. Research Bull. No. 2, p. 146. 



THE COST OF FEED 13 

In this connection, however, it must be kept in mind that the 
calculations are based upon the cows keeping a constant weight. 
If the practice is to underfeed the cows during the winter, 
depending upon the stored-up energy accumulated by the cows 
while on pasture, less feed might be given with a return in 
milk greater than the feed given would supply. This practice 
is followed by many dairymen, and an allowance must be 
made when this is done. That is primarily summer dairying; 
the data which follow are based upon a year-round production. 

The writer has applied the following method to a number of 
actual cost calculations of feed required and the results are 
remarkably near the actual — as near no doubt as the actual 
weight records could be kept in a practical way. 

The difficulty in applying this method to actual records 
that have been published, except in a very few instances, is 
that the amount of food secured from pasture has not been 
stated. A definite price charged for pasture and the actual 
amounts of the feed are given, but unless it is known what 
amount of the total feed was furnished by the pasture, the 
results can not be checked. It is important that cost records 
give the returns from pasture, or the time the cows were 
supplied by the pasture. Under some circumstances and con- 
ditions the pasture would furnish an even greater part of the 
feed for the year than is suggested by Woll in the work 
referred to above. 

Before applying the formula for feed cost it will be necessary 
to give the material upon which it is based. This may be 
presented in three tables, as follows: 

Table I. Maintenance Requirement for Cows.^ 

Pounds Therms 
digestible net 

protein. energy. 

500-pound cow requires for maintenance 3 3-8o 

750-pound cow requires for maintenance 4 4-95 

1,000-pound cow requires for maintenance 5 6-°° 

1,250-pound cow requires for maintenance 6 7.00 

I, Soo-pound cow requires for maintenance 65 7.90 

1 Farmers' Bull. No. 346, U. S. Dept. of Agr., p. 16. 



14 



MILK PRODUCTION COST ACCOUNTS 



Table II. Requirement for Milk of Varying Richness.^ 



Per cent. 
3.00 
3-So 
4.00 
4-SO 
5.00 
5-50 
6.00 
6.50 



Digestible 

protein per 

pound of milk 

.050 

.052 

.05s 
.058 
.062 
.066 
.070 
•07s 



Therms 
energy. 
.26 
.28 
30 
33 
36 
40 

45 
50 



The following may be used when individual production is 



not known: 



Digestible 
protein. 

Holsteins 05 

Shorthorns 055 

Ayrshires 055 

Brown Swiss 055 

Jerseys 066 

Guernseys 066 



Therms 
energy. 
.26-28 
.28-30 
.28-30 
.28-30 
.40-45 
•40-.4S 



Table III. For the Exact Calculation of Individual Rations.^ 

Digestible protein, and energy values per 100 pounds. 

Feeding stuff. Digestible Energy 

true protein. value, 

(pounds) (therms) 
Green fodder and silage: 

Alfalfa 2.50 12.45 

Clover — crimson 2.19 11.30 

Clover — red 2.21 16.17 

Corn fodder — green 41 12.44 

Corn silage 0.88 16.56 

Hungarian grass 1.33 14.76 

Rape 2.16 11-43 

Rye 1.44 11.63 

Timothy 1.04 19.08 

Hay and dry coarse fodders: 

Alfalfa hay 6.93 34-41 

Clover hay — red 5.41 ^ 34-74 

^ " Nutrients required for Milk Production," Univ. of Mo., Research Bull. 
No. 7, p. 138. 

^ Pa. E.xp. Sta., Bull, iii, p. 15, and Farmers' Bull. 346, p. 15. 



THE COST OF FEED 1 5 

Hay and dry coarse fodders — Continued 

Corn forage — field cured 2.13 30.53 

Corn stover 1.80 26.53 

Cowpea hay 8.57 40.76 

Hungarian hay 3.00 44.03 

Oat hay 2.59 26.97 

Soy bean hay 7.68 38.65 

Timothy hay 2.05 33-56 

Straws : 

Oat straw 1.09 21.21 

Rye straw 63 20.87 

Wheat straw 37 16.56 

Roots and tubers : 

Carrots 37 7.82 

Mangelwurzels 14 4.62 

Potatoes 45 18.05 

Rutabagas 38 8.00 

Turnips 22 5.74 

Grains: 

Barley 8.37 80.75 

Corn 6.79 88.84 

Corn-and-cob meal 5.53 72.05 

Oats 8.36 66.27 

Pea meal 16.77 7i-7S 

Rye 8.12 81.72 

Wheat 8.90 82.63 

By-products: 

Brewers' grains — dried 19.04 60.01 

Brewers' grains — wet 3.81 14.82 

Buckwheat middlings 22. 34 75-92 

Cottonseed meal 35-iS 84.20 

Distillers' grains — dried 

Principally corn 21.93 79.23 

Principally rye 10.38 60.93 

Gluten feed — dry i9-9S 79-32 

Gluten meal — Buffalo 25.56 88.80 

Gluten meal — Chicago 33-09 78.49 

Linseed meal — old process 27.54 78.92 

Linseed meal — new process 29.26 74-67 

Malt sprouts 12.36 46.33 

Rye bran 11,35 56.65 

Sugar-beet pulp — fresh 63 7.77 

Sugar-beet pulp — dried 6.80 60.10 

Wheat bran 10.21 48.23 

Wheat middlings 12.79 77-65 



1 6 MILK PRODUCTION COST ACCOUNTS 

To illustrate the application of this method, certain condi- 
tions may be assumed: suppose that we have a herd of Guern- 
sey cows which average i,ooo pounds in weight, that give on 
an average 8,500 pounds of milk per year, and that the milk 
contains 5 per cent of butter-fat.^ The first step is to calcu- 
late the amount of protein and energy required by the cows. 
Assume that 20 per cent of the year's feed is secured from 
pasture. The cows will no doubt be on pasture more than 
20 per cent of the days in the year, but secure some other 
feed a part or all of the time they are on pasture. We have 
then to provide feed for 280 days. By referring to Tables I 
and II we determine the following needs for cows of this sort: 

Protein. Energy. 

Maintenance 5 x 280 = 140 6 X 280 = 1,680 

8,500 pounds 

5 per cent milk 062 x 8,500 = 467 36 X 8,500 = 3,060 

Total amounts needed 607 4, 740 

The cows must be supplied with 607 pounds of digestible 
protein and 4,740 therms of net energy. Now let us assume 
that we are feeding silage and clover hay for roughage. Re- 
ferring to the formula suggested above, we find that a 1,000- 
pound cow would consume 6 pounds of hay and 25 pounds of 
silage, or 1,680 pounds of hay and 7,000 pounds of silage for 
the 280 days. By referring to Table III we find that 1,680 
pounds of red clover hay supplies 90.89 pounds of the digest- 
ible protein and 583.63 therms of net energy. In like manner 
the protein and energy supplied by the silage can be computed. 

Pounds protein. Therms energy, 

Amount needed 607.00 4,740.00 

Supplied by hay . .90.89 583.63 

Supplied by silage. 61.60 1,159.20 

Total 152.49 1,742.83 

To be supplied by grain 454.51 2,997.17 

Now by turning to Table III we can select a ration that 
has a ratio of protein to energy equal to that of the part to 

^ "Studies in Milk Production, " Woll, Wise. Exp. Sta., Research Bull. 
No. 26, p. 74; figures from actual records of cows in contest. 



THE COST OF FEED 1 7 

be supplied by grain, which is about 1:6.5. Such a mixture 
is supplied by the following ration: 

Protein. Energy. 

150 pounds corn or hominy 10.5 132 

100 pounds distillers' grains 22 79 

100 pounds bran 10 48 

100 pounds oats 8 66 

450 So-S 32s 

This ration supplies 50.5 pounds of protein and 325 therms 
of energy. By dividing 454.51, the amount of protein needed, 
by 50.5 we get the amount of this mixture needed for the year, 
or nine. Expressed in another way, each cow of the size and 
production indicated would require besides the hay and silage 
9 times each of the different quantities of feeds used in the 
above mixture. These feeds would not furnish the cheapest 
ration at the present time, but are the ones commonly used 
by the dairymen from whom Woll gathered his data. The 
size and production of the cows assumed here are also the 
averages for the Guernseys in these studies, and the prices 
here assumed are the same as those used by Woll. 

To summarize the feed cost, we have the following: 

1,680 pounds of hay at $0.80 per 100 $i3-44 

7,000 pounds of silage at $0.15 per 100 10.50 

1,350 pounds of corn at $1.00 per 100 i3-5o 

900 pounds of distillers' grains at $1.50 per 100 i3-So 

900 pounds of bran at $1.05 per 100 9.45 

900 pounds of oats at $1.10 per 100 9.90 

Pasture for season at $5.00 5.00 

Total cost of feed for year $75.29 

The average cost of feed per year for 157 cows included in 
the studies by Woll was for Guernsey cows of this class $70.95. 
These cows averaged 8,500 pounds of milk, so the two results 
differ by less than one-fifth cent per quart. Some of the 
rations contained less distillers' grains, making a cheaper ra- 
tion, and some cows got more than 20 per cent of their total 
food from pasture, both of which tends to reduce the average 
cost. Others got some stover and straw. 

This method requires considerable space for discussion, but 



l8 MILK PRODUCTION COST ACCOUNTS 

it can be calculated quickly and easily, and can be applied 
to any system of feeding. The accuracy of the method can 
not be questioned, and it will not only simplify cost estimates, 
but make them applicable under definite conditions at any 
time. A further benefit from its use is that the advantages 
and disadvantages of different systems may be studied. Gen- 
erally it is not definitely known how valuable pasture really 
is, and in some cases it is not considered economical to pasture 
cows at all. A glance at the summary of feed costs on page 
29 will show that although pasture was charged at $5 for the 
season, still Woll's figures indicate that the Guernsey cows in 
the contests derived from 16.2 to 20.9 per cent of their total 
feed units for the year from pasture. It is obvious that the 
pasture was really worth several times $5. 

As a further suggestion of the value of pre-calculated feed 
costs, we find by referring to the Bulletin by Woll ^ that in 
comparing the different breeds of cows, for the best 25 Hol- 
steins the ratio of cost of feed to net returns was 100:107, 
while for the best Jerseys the ratio was 100:143. The pasture 
was charged at $5 per season, but on page 74 of WoU's pub- 
lication the 25 best Holsteins are shown to have received 12.8 
per cent of their feed units from pasture, while the Jerseys 
secured 25.4 per cent and at the same charge. This is simply 
cited as an instance where such a method as is suggested can 
be used in calculating feed costs, and in showing the advan- 
tages or disadvantages of different systems. 

Although in general it is well to have high production to 
counterbalance the cost of maintenance, the last few pounds 
of production of many cows cost too much. Often by feeding 
less grain and not attempting to force to the very limit a cow 
will produce somewhat less milk, but the total amount of milk 
secured will be produced at proportionately less cost. A cost 
calculation month by month will show when the cows are most 
profitable and how expensive they are, or even how much the 
profits of some months are consumed by expensive or forced 
feeding during other months. 

1 " Studies in Dairy Production," Wise. Exp. Sta., Research Bull. No. 26, 
p. 72. 



CHAPTER III 

THE COST OF LABOR 

Labor, although not the largest item of cost, is of consid- 
erable importance in dairy herd management. It is of peculiar 
interest because of its various phases and effects upon the 
dairy industry. Some dairymen claim to have been driven 
out of the business because of the difficulty of getting men to 
work on farms where cows are kept, while others continue in 
the business because it furnishes employment to regular help 
at times when the men could not be used otherwise, although 
it may not pay in full for the labor. 

There is difficulty in securing good labor on dairy farms 
when the men are expected to milk a few cows before break- 
fast, then do a day's work in the field, and return to milk 
the cows again in the evening. Where the milking is consid- 
ered an essential part of the day's work there is no more diffi- 
culty in getting good men on a dairy farm than on any other 
kind of farm. On large dairy farms where the hours are defi- 
nite and the work is regular, practically no trouble is found 
in getting and keeping good men. On the small farms the 
labor is performed with no extra cost and in addition to the 
work in the field. When cost records on these farms show that 
the milk is produced at a loss, it simply means that labor is 
performed at a lower wage than the figure used in the cost 
account. Often, however, the farmer is willing to do the work 
for the increase in income, although it is less than a good 
wage. Also the women and children do the milking and care 
for the cows in some cases; on some farms the children are 
home from school and can help with the dairying during the 
busy season. Women and children usually are better milkers 
than men, because their hands and muscles are not so hard. 
The use of child labor on the farm is not to be compared with 



20 MILK PRODUCTION COST ACCOUNTS 

its use in the factory, for on the farm the children work with 
their parents and under conditions that are helpful. The dairy 
furnishes a good medium for using the children on the farm. 
It may not, however, be out of place here to say that the 
dairy farms more than any other are driving the boys to the 
cities. Poor cows, poor barns, and the milking as extra work 
discourage boys from remaining on the farm. On the other 
hand, when good cows are kept, in convenient, comfortable 
barns and when caring for them is considered a part of the 
day's work, or better still where the time is spent solely in 
caring for cows, the work in the dairy is not objectionable to 
most boys. 

The labor cost does not vary so much on different farms 
as does the feed cost, assuming that milk of equal quality is 
produced. The system of management and the number of 
cows kept are important factors. Where the labor is paid 
for and used in caring for cows when it could be used other- 
wise, it costs less for labor to increase the number of cows up 
to a point where one man would devote all his time to the 
dairy. There would be less time lost, the man would be 
better satisfied, and the cattle better cared for. On the other 
hand, It often develops that when the caring for the cows is 
done on extra time or by women and children, and when the 
herd is increased so much that the producer must hire extra 
labor for the dairy, he often finds the business less profitable. 
This in a large measure is the reason some dairymen who are 
producing milk from large herds find it difficult to compete 
with the smaller producer on a basis of the same grade of 
milk. Some dairymen succeed with the larger herd by turning 
to the production of a higher grade of milk, for which they 
demand a higher price. 

From the standpoint of actual time required per cow and 
the efficiency of labor, the larger dairy is to be preferred. The 
man who devotes all his time to the cows can give them better 
care and lose less time. On dairy farms where men do work 
in the fields much time is lost in changing from one job to 
another, and a man can not do as good work in the barn when 
he also does heavy work in the field. 



THE COST OF LABOR 21 

It is the practice of some in figuring milk cost to conclude 
that the manure offsets the cost of labor. This may not be 
far from correct on farms where summer dairying is practiced 
and the cows are allowed to go dry in the fall and gather 
their winter maintenance from corn fields and straw stacks. 
Sheppard and Richards ^ in their cost estimates state that: 

"Only the cost of feed is included in the cost of production. The 
value of manure is taken as offsetting the cost of labor, as is cus- 
tomary to do in preparing estimates of this kind. If the cows were 
credited with the value of the manure, it would no doubt offset 
the cost of labor required to care for thfe herd." 

With winter feeding and care, and especially where clean 
milk is produced the manure is not worth the cost of labor. 

The number of cows in the herd is a factor to consider. 
Certain operations take about the same time whether many 
or few cows are kept. In general, it takes five times as long 
to milk five cows as one, but twenty cows can be fed or brought 
from the pasture in about the same time as five. The amount 
of milk a cow gives is also important, for it requires no more, 
or only a little more time to milk a cow that gives a large 
quantity than one that produces less. 

The cost of labor required to care for a cow a year is given 
by various authors as follows: Truman ^ $33.60, Minkler ^ one 
man for twelve cows, at $1.50 per day, or $43 per cow per 
year, Rasmussen * $22.33; o^ specialized dairy farms each man 
takes care of fifteen cows, or $36 per cow per year. Hooper 
and Robertson* estimate the cost at $23.12 per cow, or 154.5 
hours a year, or 25.4 minutes per cow per day. Thompson® 
states that on dairies studied, 155 hours of labor were required 
to care for each cow and accompanying stock in herds of 
twenty or less cows, and 107 hours in herds with more than 
forty cows; the cost was $18.11. Johnson and Ford ^ state 

^ " Dairy herd records," No. Dak. Agr. Exp. Sta., Bull. No. 91, p. 153. 
2 Storrs Conn. Exp. Sta., Bull. No. 73, p. 130. 
' New Jersey E.xp. Sta., Report, 1909, p. 165. 

* New Hampshire Exp. Sta. Ext., Bull. No. 2, p. 9. 

' New York Exp. Sta. (Cornell), Bull. No. 357, p. 153. 

* Ibid., Bull. No. 364, pp. 147 and 140. 

^ Missouri Agr. Exp. Sta., Bull. No. 125, p. 310. 



22 MILK PRODUCTION COST ACCOUNTS 

the average cost of labor on certain Missouri farms was $24.60 
per year per cow. Warren ^ concludes that in well-managed 
dairies 150 hours are required per year per cow, and that in a 
study of labor cost it is necessary to decide the kind of milk 
being produced. The necessary extra time to produce clean 
milk is less than many suppose. Whittaker ^ gives as the 
additional time necessary to raise ordinary conditions 16 points 
in score, only 15 minutes per cow per day. He summarizes 
conditions involving expense as follows: 

Item. Minutes per day per cow. 

Cleanliness of cows 5 

Cleanliness of stable and air 3 

Cleanliness of milkhouse 2 

Scalding utensils i 

Wiping udder 2 

Removal of milk 2 

Total IS 

"To increase the score of a dairy from 42 to approximately 70 
points, there may be in fifteen-cow dairies an added expense of 5 
cents per cow per day for labor." 

In large herds and where a high grade of milk is produced 
the following units of time for each operation will be found to 
be applicable: 

Operation. Time required per cow per day. 

Cleaning stables of manure 3 minutes 

Feed, grain and roughage 3.5 

Groom 3 

Wash cows 3 

Bed cows 1.5 

Milk cows twice a day 10 

Total 24 minutes 

These units are only applicable where the barn is conven- 
ient, and where the men do nothing but care for the milch 
cow and not the young stock which accompanies them. It is 
on a basis of each man doing a particular single operation. 
The man who feeds does nothing else, and the milkers only 
milk the cows. 

^ " Farm Management," p. 122. 

2 U.S. Dept. of Agr., Bur. of Animal Ind., Circ. No. 170, pp. 128-129. 



THE COST OF LABOR 2$ 

A man can do the work in the barn where there are 20 to 
25 cows, but when one man performs all the diflFerent opera- 
tions he can not do them in the time stated. The above table 
does not provide for the time required to care for the milk and 
utensils. Where a system of soiling is followed, fewer cows 
still could be attended by one man. Under conditions where 
20 or more cows are kept and where pasture is used for several 
months a figure of 180 hours per cow will be required. With 
ordinary care this figure may be reduced considerably. This 
accounts for the full time of a man 365 days at 10 hours per 
day for 20 cows. Time of course must be deducted for vaca- 
tion and holidays, but this is compensated for by the decrease 
in labor when the cows are dry or when on pasture. It is 
therefore a fair and practical procedure to calculate the cost 
of labor on a basis of 20 cows per man, or to pre-calculate 
labor cost by dividing the cost of one dairyman per year by 
20 to get the cost per cow. At a price of $45 per month, 
without board, the cost per cow is $27. 

The cost of labor varies widely in different sections and also 
with the seasons, but the dairy furnishes employment fairly 
constantly for the men throughout the year. The study of 
labor cost is also desirable to show the returns for labor per- 
formed by members of the family when they are employed in 
the dairy. 

The milking machine is being used to a considerable extent 
in some sections in an attempt to solve the labor problem. 
With 20 or more cows the machine will likely come into more 
general use. There is not, however, at the present time any 
accurate record covering long periods where actual time records 
show a decrease in cost due to the use of machines. It has 
been shown in experiments by the author and others that the 
machine in the hands of a careful man will milk a cow well and 
apparently has no injurious effect upon the cow. It has also 
been shown that with especial care milk with low bacteria 
content can be produced with the machine. 



CHAPTER IV 

THE COST OF BUILDINGS 

In dairying a charge must be made for the use of the build- 
ings. This is best figured from costs which include interest on 
investment, repairs, insurance, taxes, and depreciation. It is 
a rent charge. Several problems present themselves in a cal- 
culation of this cost. The first question to be answered is, 
which buildings should be charged to the cows? It has been 
customary to include buildings for cows and the storage barns 
for hay. Where hay is charged to the cows at market price 
it is not just to charge the cows with the storage barns also. 
It is necessary to have the hay barn even if cows are not kept. 
If the price of hay charged to the cows, however, is based on a 
price of purchase of the year's supply in haymaking season, 
the storage will of necessity be included in the cost of milk 
production. We shall not consider the storage-barn cost a 
proper charge to cows, for we have charged hay at market price, 
and it is necessary to have the barn to store the hay for market 
even where it is not fed to cows on the farm. 

The cost of a barn for dairy cows varies widely, depending 
upon its durability, construction, convenience, and sanitary 
condition. It may pay to build more substantial barns, barns 
that will depreciate less, and be less subject to destruction by 
fire. The difficulty has been that methods of housing has 
changed frequently. The best shape or size of building has 
not been definitely determined. The tendency has been to 
construct expensive barns for the housing of dairy cattle where 
especially clean milk is produced. In some cases cows are 
kept in barns so expensive that the overhead charge for in- 
terest, taxes, and insurance has made profitable milk produc- 
tion an impossibility. The comfort and health of the animals, 
however, must be maintained. The present tendency is to 



THE COST or BUILDINGS 25 

build less expensive barns or to provide only open sheds for 
dairy cows. In most sections this will greatly decrease the 
overhead, keep the cows in a more healthy condition, and 
decrease the cost of labor. Some large producers plan to have 
one central milking and cleaning barn and allow the cows to 
run in open sheds or in closed yards. This arrangement will 
do away with the expensive milk barns and greatly reduce 
the cost of labor, as it will not be necessary to keep so much 
space clean enough for the milking. Some expenditure for 
convenient barns often lowers the total cost of production by 
decreasing the cost of labor. 

The open shed system, however, has not come into general 
use, and the calculations herein are based on the cost of per- 
manent closed buildings. Stone, brick, cement, hollow-tile, and 
other permanent buildings for dairy cows have come into gen- 
eral use in recent years. The cost in some sections is only a 
little more than for frame buildings, and the depreciation and 
danger from fire is considerably reduced. The latter item is im- 
portant, especially where a good strain of cows has been devel- 
oped. Concrete floors with cement plastered walls are desirable 
from the standpoint of sanitation. They can be cleaned easily 
and thoroughly. Cork and creosoted wood blocks also are used. 
These make the bed for the animals more comfortable; they 
are not so cold, and the cows are less Hkely to be injured by 
slipping. It should also be noted that these floors require less 
bedding than where concrete is used, which in some sections 
is sufficient to warrant the additional expense, in view of the 
relatively high cost of bedding. The interest per cow on well- 
constructed buildings is comparatively high, but the depre- 
ciation is low. It has been the practice to build two-story 
barns, with the feed stored above. In a study of this prob- 
lem made by the author it was found that no saving in cost 
results from the arrangement when the safety of the cattle 
is considered; also that with the proper arrangement of feed- 
ing facihties the labor required is not made greater by having 
separate buildings for the feed and for the cows. 

A two-story barn must be built strong enough to hold the 
hay, and if a fire-proof floor is included the expense is consid- 



26 MILK PRODUCTION COST ACCOUNTS 

erable. By storing the hay on the ground floor the cost of the 
storage barn is greatly reduced. The cows can then be housed 
in a separate one-story barn, which can be kept more sani- 
tary and in which the cows are in less danger from fire. 

The number of cows to be kept in a herd is a factor in 
unit cost of building. The cost per cow is less in a 50-cow 
barn than in a 20-cow barn of the same construction. The 
cost per cow for the barn varies in good dairies from $25 to 
$100 or more per head. A 50-cow barn of modern construc- 
tion, such as a hollow-tile or concrete barn with concrete 
floors, walls, and ceiling, can be built for about $80 per head. 
This is for a good barn with proper ventilation system and 
modern sanitary arrangement, for a specialized dairy capable 
of meeting all requirements for the production of a high grade 
of milk. 

Interest on investment may be figured at 5 per cent. The 
insurance will be from 0.2 to 0.4 per cent, depending on the 
relation to other buildings, etc. The taxes will vary consid- 
erably, depending upon the locality and method of assessment, 
and especially upon whether the enterprise is taxed separately 
or included in the whole farm tax. If assessed at one-half 
value, at a rate of 2 per cent, the item of taxes would be 80 
cents per cow per year. The depreciation and annual repairs 
of a building of this kind would not amount to more than 4 
per cent. A summary of the cost of building under these 
conditions would be as follows: 

Interest, $80 at 5 per cent $4.00 

Insurance, $80 at 0.3 per cent 24 

Taxes, $40 at 2 per cent 80 

Depreciation, $80 at 4 per cent 3.20 

Total unit cost of housing $8.24 



CHAPTER V 

THE COST OF CATTLE 

The charge for cattle or for their use is the most disputed 
item of milk cost. A question that first arises is shall the 
cows be invoiced at cost of production or at a price at which 
they could be bought or sold as milch cows. Most cost ac- 
counts make use of the latter figure. The cows are valued at 
the beginning of each year at what is believed to be a fair 
sale or purchase price of the animals, even if they have been 
raised at less actual cost. This is not good business, for 
it inflates the capital really invested, and does not represent 
actual cost. In a previous chapter the feed charge is based 
on selling price of feeds raised on the farm; with cows, how- 
ever, the cost of production is recommended as a basis for 
computing the cost. This may seem inconsistent, but the 
charges are not on the same basis, for the farm is independent 
of the dairy. The cost records are kept for the purpose of learn- 
ing the income from the dairy itself. Profits may be secured 
from the farm and it is unfair to give to the cows the credit 
for the management and risk of that enterprise. The raising 
of cows, on the other hand, is a part of the work of the dairy, 
and, if the animals are sold the business is that of raising cows 
and not of producing milk. 

In calculating the cost of cattle in milk production, there- 
fore, the .depreciation, interest, insurance, and taxes should be 
based on the cost of producing the cows if they are raised by 
the dairyman, or on purchase cost if bought. When the cost 
of production is less than purchase price for the same grade 
of cows, the advantage of raising the cows is apparent. Often, 
however, cows can be purchased for less than it would cost to 
raise them. To build up permanent dairies it is necessary to 
raise the cows, especially if a high-producing, healthy herd is 



28 MILK PRODUCTION COST ACCOUNTS 

to be maintained. When high-priced cattle are purchased the 
overhead expense of cows is greatly increased. 

In the raising of dairy cows to the age of two years the 
studies of Bennett and Cooper ^ furnish material for pre- 
calculating the cost. Careful records of cost for a period of 5 
years were kept. The following amounts of feed were con- 
sumed, on the average, during the first two years: 

First year. Second year. 

Whole milk 342 

Skim milk 3)i65 

Mixed hay 857 1,120 

Com silage 352 3,250 

Grain mixture^ 547 

Pastural, days 123 171 

Corn stover 672 

With these data the feed cost can be calculated. If we 
assume the same prices for feeds as were used in figuring the 
cost of feeds for cows, and with skim milk at 20 cents per 
hundred, whole milk at $2. per hundred, mixed hay at $15 per 
ton, corn silage $3 per ton, corn stover $6 per ton, and the 
grain mixture $1.15 per hundred, we find that with the above 
amounts consumed the feed cost to raise a heifer to two years 
of age is $47.51. Some of these prices will apply to present 
conditions; some are higher and some lower. They are used in 
order that the same basis of prices may be carried throughout 
this study. 

The labor required to care for these animals during the first 
year was 40 hours, and during the second year 23 hours. At 
a price of 15 cents per hour, as is used above, the labor cost 
would be $9.45 per head for the two years. 

The other expenses, including interest, buildings, equipment, 
bedding, loss by death, and miscellaneous expenses amount to 
$16.67 for the two years. This makes the total cost of raising 
the heifers, including feed, labor, and overhead, $73.63. A 
credit of $12 for manure for the two years makes the net cost 
for a two-year-old heifer $65.63. This corresponds very closely 

^ U. S. Dept. of Agr., Farmers' Bull. No. 49. 

^ Bran, 4 parts; oats, 5 parts; and oil meal, i part. 



THE COST OF CATTLE 29 

with Other cost records. Truman ^ figured the total cost of a 
two-year-old heifer to be $70, but he added $4 as the initial 
value of the animal, while Lindsey - found the cost under con- 
ditions of higher cost of feeds and with an initial charge of 
$4 to be $74.24. 

An initial charge for the calf should not be included, for 
there is no actual cost. The calves would be produced even 
if it were necessary to slaughter them at once. When a cost 
price for the calves is not allowed, the cost price of milk is 
more nearly accurate. With male calves not needed to main- 
tain the herd, instead of a charge the calf represents a credit. 
The amount of credit to the herd for calves is discussed in a 
later chapter. 

With the heifer coming into the herd at a cost of $65, it 
must next be determined how long she will likely be in the 
herd as a profitable producer of milk and how much she will 
be worth at the end of her period of profitableness as a milk 
producer. The amount of depreciation per year will depend 
upon the number of years the cow is profitable, and is the 
difference between the cost of the cow at entry into the herd 
and her sale price as beef. A high-cost cow depreciates more 
than a cheaper one, for both are worth about the same when 
sold for beef. Often the less expensive cow sells for more on 
account of her more beefy conformation. The length of use- 
fulness of cows varies, but on the average the economic life 
of a dairy cow is much shorter than is generally beheved, and 
is a large item of expense, especially where high-cost animals 
are kept. Various estimates have been made of the length of 
time a cow should remain in the herd. The average life of a 
cow according to Rasmussen ^ is about 6 years. According 
to actual records by Thompson ^ in herds of Delaware County, 
New York, changes in cows were made which indicated that 
the average productive life of a dairy cow was only 3.6 years, 
while in a survey of opinions of 174 farmers in the same county 

^ Mass. Agr. Exp. Sta., Amherst, Bull. No. 164, p. 70. 

2 Storrs, Conn. Exp. Sta., Bull. No. 63. 

3 New Hampshire Exp. Sta., Ext., Bull. No. 2, p. 12. 

* New York Agr. Exp. Sta. (Cornell), Bull. No. 364, pp. 130-131. 



30 MILK PRODUCTION COST ACCOUNTS 

the average is estimated as 5.8 years. The statement is made 
by Thompson that this is perhaps a more reHable figure. 
Studies in farm management by the U.S. Department of 
Agriculture ^ show that the dairy cows of Chester County, 
Pennsylvania, remained in the herd 4.34 years, while in Lena- 
wee County, Michigan, they remained 4.52 years. Four, five, 
six, and seven years are given by different authors as the 
average life of a cow in the dairy herd. There is no doubt 
considerable difference in the productive life of a cow, due to 
varying standards of production. By one dairyman under 
certain conditions a cow may be considered a profitable ani- 
mal, while with another under different conditions the same 
production would be unprofitable. In the studies made by 
the Department of Agriculture valuable data on the rate of 
depreciation of dairy cows have been assembled. The results 
are based upon the operations of 643 farms in Chester County, 
Pennsylvania. The data are offered to form a basis of obtain- 
ing the approximate average charge which must be made for 
depreciation in cows, and the authors say: ''This method may 
be applied to an individual herd of cows as well as to the 
average of a large number of herds." The average annual 
loss in Chester County on dairy cows was 11.82 per cent of 
the average of the inventory value for the beginning of the 
year. Similar calculations for Lenawee County, Michigan, 
gave the annual depreciation as only 4.07 per cent. This dif- 
ference is due to the difference in price at which cows are 
bought and sold in the two localities. In Michigan the aver- 
age price paid for cows was $48.48 and the sale price of the 
discarded cow $42, while in Pennsylvania the cost was $63.84 
and the sale price $37.36. 

Although these data are valuable, the percentages can not 
be used except under the same conditions and prices. This 
is seen by the great difference in the percentages for Pennsyl- 
vania and Michigan. In an attempt to get a method that 

could be used under all conditions the formula =-, where x 

represents the cost of the cows, y the sale price of discarded 
^ U. S. Dept. of Agr., Professional Papers, Bull. No. 341. 



THE COST OF CATTLE 3 1 

COWS, and n the years of usefulness, was decided upon. A 
definite value for w is a problem that is attended by the diffi- 
culty of obtaining a figure that may be substantiated with 
actual figures. The length of use of a cow in herds where 
records of production and feed consumed are not kept can 
not be used, for it is not possible to tell without these data 
when the end of the cow's usefulness has come. This no doubt 
also largely accounts for the fact that during recent years the 
length of service of a cow apparently has shortened. There- 
fore records of cow-testing associations are resorted to. The 
actual ages when the cows are discarded are not recorded, 
but the ages of the cows are given. In records on file in the 
Dairy Division of the U.S. Department of Agriculture the 
ages of 13,856 cows in associations are given. These represent 
cows in different sections of the country, kept under different 
conditions of feeding and management, and in some cases 
represent the same group of animals for six or seven years. 
The ages of particular cows do not indicate definitely when 
these particular cows will die or become unprofitable, but the 
ages of great numbers indicate the probable length of life. 
For the determination to be more exact and similar to the 
method used by life insurance actuaries, a record of the cows 
of the different ages that die during any particular year is 
also kept. Owing to the large number of cows recorded and 
the long period of years covered, it is assumed that the aver- 
age age at exit can be calculated from the number living at 
the different ages. In some sections a greater proportion of 
the cows may have been discarded the first year of the asso- 
ciation, though it will be seen that in the associations that 
have been running for six and seven years the number of old 
animals does not increase. The following table gives the ages 
of cows in the 52 cow-testing associations reporting the ages 
of the 13,856 cows recorded by the Department of Agriculture: 



32 MILK PRODUCTION COST ACCOUNTS 

AGES OF COWS IN COW-TESTING ASSOCIATIONS 

Name of Association. Year. 23456 

Canton, Maine 1908- 9 30 41 42 32 49 

Minot, Maine 1910 23 70 82 94 92 

Waterford and Norway, Maine 1909-10 18 57 48 62 50 

Waterford and Norway, Maine 1911-12 21 38 43 47 35 

Waterford and Norway, Maine 1912-13 31 52 39 35 31 

Waterford and Norway, Maine 19 13-14 31 58 34 35 25 

Waterford and Norway, Maine 1914-15 23 61 41 28 28 

Waterville, Maine 1910-11 31 29 17 13 25 

Somerset County, Maine 1910-11 34 43 30 28 34 

West Penobscot, Maine 1909-10 30 37 30 28 19 

Winthrop, Maine 1908- 9 18 26 44 41 26 

Newaygo County, Michigan 1906 12 39 26 31 27 

Newaygo County, Michigan 1907 45 38 20 27 22 

Newaygo County, Michigan 1908 11 29 23 24 30 

Newaygo County, Michigan 1909 44 29 25 33 36 

Newaygo County, Michigan 1911 65 61 46 15 15 

Newaygo County, Michigan 1910 58 46 20 15 28 

Newaygo County, Michigan 1912 71 63 46 28 11 

Newaygo County, Michigan 1914 109 55 48 46 29 

Stillwater, Pennsylvania 1914-15 84 88 85 68 59 

Barron and Rice Lake, Wisconsin. . .1909-10 28 22 34 24 20 

Barron and Rice Lake, Wisconsin. .. 1910-1 1 14 37 22 30 30 

Barron and Rice Lake, Wisconsin. . .1914-15 92 51 52 46 26 

Black River Falls, Wisconsin 1914-15 33 72 33 37 36 

Bloomer and Eagle Point, Wisconsin. 1909-10 37 28 29 30 30 

BloomerandEaglePoint, Wisconsin .1913-14 10 29 22 14 13 

Briggsville, Wisconsin 1910-11 14 27 15 21 22 

Columbus, Wisconsin 1913-14 27 31 31 S3 29 

Clear Lake and Reeve, Wisconsin. . .1914-15 25 51 36 27 32 

Eau Clair, Wisconsin 1914-15 21 36 26 22 24 

Fennimore, Wisconsin 1914-15 38 52 57 17 36 

Fox River, Wisconsin 1909-10 33 44 32 23 30 

Gilmanton and Dover, Wisconsin. . .1914-15 23 69 62 58 38 

lola, Wisconsin 1913-14 44 45 29 48 44 

Lake Mills, Wisconsin 1909-10 10 27 29 34 22 

La Crosse, Wisconsin 1912-13 7 20 34 ^3 44 

Ontario, Wisconsin 1914-15 44 35 43 19 23 

Portage County, Wisconsin 1913-14 ^3 67 50 36 21 

Preston, Wisconsin 1914-15 56 53 44 52 30 

River Falls and Roberts, Wisconsin . .1913-14 123 68 35 30 35 

River Falls and Roberts, Wisconsin . .1914-15 29 64 47 34 31 



THE COST OF CATTLE 



33 



AGES OF COWS IN COW-TESTING ASSOCIATIONS — Continued 

IS i6 17 18 19 Total 

318 
S74 
357 
293 
279 

I 274 
288 
179 

o I 257 
204 
211 
211 
246 
202 
28s 
303 
267 
307 
337 
566 
180 
175 
337 
269 
194 
109 

195 
208 
206 
187 
285 
247 
357 
297 
159 
249 
229 
268 

309 
372 
282 



7 


8 


9 


10 


II 


12 


13 


14 


IS 


16 


35 


39 


21 


14 


4 


6 


5 








57 


60 


46 


28 


8 


4 


5 


4 





I 


43 


2>5 


22 


14 


I 


5 


I 


2 


I 




27 


21 


17 


17 


9 


13 


2 





I 


2 


21 


22 


21 


9 


10 


7 


5 


I 





I 


24 


23 


12 


17 


4 


3 


3 


2 


I 





27 


20 


19 


16 


15 


4 





I 


2 


2 


20 


20 


5 


II 


5 


2 








I 




29 


22 


II 


8 


5 


6 


3 


I 


2 





20 


15 


9 


3 


S 


5 


3 








27 


5 


II 


S 


I 


S 


2 








14 


25 


15 


14 


2 


4 





I 


I 




26 


25 


II 


II 


II 


5 


2 





2 





19 


18 


22 


IS 


7 


3 


II 








42 


31 


19 


16 


4 


3 


3 








25 


16 


27 


12 


7 


10 


2 





2 




20 


35 


13 


14 


II 


3 


2 


2 






14 


23 


9 


21 


9 


7 


5 








17 


14 


6 


2 


4 


S 





I 





I 


65 


59 


30 


IS 


8 


2 





2 








13 


16 


9 


3 


S 


3 


3 








14 


II 


S 


7 


2 


2 





I 






21 


23 


10 


13 


I 


I 














17 


22 


7 


6 


I 


2 


I 


2 






16 


IS 


3 


I 


4 


I 











I 


7 


7 


2 


5 














20 


28 


21 


12 


6 


4 


4 


I 






27 


12 


6 


4 


3 


2 





2 


I 




13 


12 


4 


6 














14 


IS 


10 


7 


4 


4 


3 


I 






31 


26 


14 


3 


6 


2 


I 


2 






18 


17 


17 


14 


5 


9 





4 


I 




31 


27 


19 


10 


9 


6 





2 





2 


31 


23 


IS 


II 


2 


4 


I 








14 


7 


II 


5 














35 


42 


15 


8 


6 


2 


I 


I 


I 




19 


22 


12 


6 


2 


3 





I 






14 


18 


13 


7 


2 


6 


I 








24 


20 


12 


8 


S 


3 


2 








iZ 


24 


10 


10 


2 


2 










32 


24 


II 


7 


I 


2 











34 MILK PRODUCTION COST ACCOUNTS 

AGES OF COWS IN COW-TESTING ASSOCIATIONS — Continued 
Name of Association. Year. 2345 6 

Sparta, Wisconsin 1909-10 40 31 27 31 24 

Stanley, Wisconsin 1912-13 3 28 34 39 37 

Tomah, Wisconsin 1909-10 21 36 35 31 31 

Waukesha, Wisconsin 1909-10 7 19 26 22 16 

Waupaca, Wisconsin 1913-14 58 47 36 54 21 

Waupaca, Wisconsin 1914-15 78 102 55 48 45 

Waupun, Wisconsin 1911-12 47 39 29 31 35 

West Salem, Wisconsin 1909-10 40 44 56 40 32 

West Salem, Wisconsin 1910-11 25 49 33 44 42 

Whitewater, Wisconsin 1909-10 23 39 38 18 29 

Wiltse, Wisconsin 1913-14 44 31 42 65 42 

Total 1916 2,353 1,962 1,821 1,641 

It will be noticed that there is an increase in the number of 
three-year-old over the two-year-old cows. This is accounted 
for by the fact that some are not bred to enter the herd until 
three years or almost three years old. In order, therefore, to 
get a figure for the probable number leaving the herd the 
first year, an average may be taken of the decrease between 
three years and six years as the decrease between two and 
three. This is found to be 237. In some sections a larger 
proportion of two-year-old cows are discarded during the fol- 
lowing year than in others. Some discard heifers the first 
year if they do not produce a certain amount of milk, while 
others give the cows a longer trial. Assuming therefore that 
the decrease between two and three is 237, the calculation 
may be continued as follows: 

Enter at two i)9i6 

Enter at three 674 

Total enter 2,590 

Assumed decrease between 2 and 3 237 

Number 3 years of age 2,353 

The next step is to get the average age at entry. Some 
dairymen make it a practice to have the heifers freshen at 



THE COST OF CATTLE 35 

AGES OF COWS IN COW-TESTING ASSOCIATIONS — Continued 

17 18 19 Total 

211 
232 
217 
124 
291 
415 
233 
296 

251 
214 
,300 



7 


8 


9 


10 


II 


12 


13 


14 


15 


16 


26 


15 


7 


I 





4 


4 


I 






28 


20 


10 


16 


6 


4 


5 


2 






27 


14 


10 


5 


I 


4 





2 






13 


II 


7 





2 


I 










25 


20 


14 


8 


2 


3 


3 








22 


23 


19 


II 


4 


3 


3 


I 





I 


IS 


16 


5 


9 


3 


2 


I 


I 






26 


25 


II 


13 


2 


4 


2 





I 




20 


17 


10 


4 


7 












25 


18 


10 


6 


3 


5 










25 


18 


9 


14 


7 





I 


2 






1,268 


1,134 


683 


502 


233 


190 


80 


43 


17 


II 


(Associations 


-52.) 

















13,856 



two years, while others for various reasons do not have them 
come into the herd until older. 

1,916 X 2 = 3,832 
674 X 3 = 2,022 

5,854 
5,854 divided by 2,590 = 2.26 

The average age of entry into the herd is thus given as 2j 
years. But it is customary to consider an animal two until 
it is three years old; in some cases the nearest whole number 
is given as the age. The average, therefore, of the two-year-old 
heifers will be 2| and the three-year-old heifers 3I years old 
at entry, so one-half year must be added, giving an average 
age at entry into the herd of 2f years. In the table below 
the ages >are given in whole numbers. The number of three- 
year-old heifers, for example, is 2,353, but these are really 3I 
on the average, and the average age at exit between 3I and 
4^ would occur at four years. 



36 MILK PRODUCTION COST ACCOUNTS 



Age at 


Decrease. 


exit. 










3 


X 


237 


= 


711 


4 


X 


391 


= 


1,564 


5 


X 


141 


= 


70s 


6 


X 


180 


= 


1,080 


7 


X 


373 


= 


2,611 


8 


X 


134 


= 


1,072 


9 


X 


451 


= 


4,059 


10 


X 


181 


= 


1,810 


II 


X 


269 


= 


2,959 


12 


X 


43 


= 


516 


13 


X 


no 


= 


1,430 


14 


X 


37 


= 


518 


15 


X 


26 


= 


390 


16 


X 


6 


= 


96 


17 


X 


5 


= 


85 


18 


X 


5 


= 


90 


19 


X 





= 





20 


X 


I 


= 


20 



Total 



19,716 



The total, 19,716, divided by the number of exitants, which 
is 2,590, gives the average age at exit as 7I years. The aver- 
age age at entry we found above to be 2| years, so that 
average Hfe is 4H years. It is probable that if the present 
standard is maintained the years of usefulness will increase as 
the associations become older and as better care is given the 
cows. This, however, furnishes a figure which should be very 
near what may be expected, and if the cost of cows is computed 
on the basis of depreciation which replaces them every 5 years 
the herd will be maintained. There are many factors that 
shorten the economic life of a cow. Death is a small factor, 
and only accounts for 1.69 per cent in Pennsylvania dairies 
and 1. 3 1 per cent in Michigan.^ Udder troubles, tuberculosis, 
failure to breed, and accidents are some of the other causes 
for a shortened period of usefulness in milk production. Some 
valuable cows which continue to breed are kept after they are 
not profitable as milk producers, but this number is very 
small. In the formula below account is not taken of the cows 

^ U. S. Dept. of Agr., Professional Papers, Bull. No. 341, p. 65. 



THE COST OF CATTLE 37 

that die or those that can not be sold for beef; in general the 

relatively small number would have little effect on the average. 

With a figure for the probable length of usefulness of a cow 

to determine the depreciation per year, all that is necessary 

is to subtract the final sale price of the cow for beef from the 

cost upon entry, and divide the result by 5, the average length 

,,.-.,, , ^, . , ,, , first cost — final price 

of life m the herd. The formula would be ; • 

length of life 

With a cow weighing 1,000 pounds, and cows selling for 4 

cents per pound, and with a first cost of the cows of $65, the 

. . . 65-40 
depreciation per year is =$5. The depreciation would 

be quite different if $200 cows were bought. In that case it 

200-40 
would be = $32 per year. A few good calves may soon 

pay this extra cost, but when it is charged to the cost of milk 
it is an important factor. Depreciation is least when large, 
common stock is kept, for at the present high price of beef 
large cows can be sold for almost as much for beef as they 
could be raised for or bought as dairy cows. Some make it 
a practice to be constantly buying and selling cows, but this 
encroaches upon another business and should not be included 
in the cost of producing milk. 

Interest, taxes, and insurance are other charges in the cost 
of cows. Interest may be figured at the same rate as above, 
5 per cent, and taxes also at the same rate, although in many 
sections it is a common practice to base the taxes on the land, 
no greater taxes being charged where 50 cows are kept than 
where there is only one. Dairy cows are seldom insured 
against death by disease, except in the case of particularly 
valuable animals. Insurance against fire and storm is a small 
item. The total annual cost of cows is, therefore, as follows: 

. . 65-40 

Depreciation, $5.00 

5 

Insurance, $65 at 0.3 per cent 31 

Taxes, $32.50 at 2 per cent 65 

Interest, $65 at 5 per cent 3.25 

Total cost per cow per year $9.21 



CHAPTER VI 

THE COST OF BEDDING 

On the farm with a small dairy, especially where located 
some distance from the city or from markets, the problem of 
bedding is a small factor. In localities, however, where straw 
can be sold at a good price and where a large number of cows 
are kept bedding is a material item of cost. A great many 
substitutes are being used for bedding for dairy cows, sawdust 
and shavings being the most common. These are in quite 
general use on farms where high-quality milk is produced, 
because of the difficulty of getting straw that is free from dust. 
It has been thought by some that sawdust and shavings are 
injurious to the soil, though this has not been demonstrated. 
It is, however, certain that the manure is not so valuable as 
when straw is used. Waste hay and stover are also used to 
bed cows, but usually these materials contain too much dust. 

When the cows are kept tied in rows and on a platform, 
the shavings and sawdust can be used with less work and will 
keep the cows cleaner. Baled shavings are preferred to all 
other kinds of bedding, for they can be handled with less 
labor, will absorb the liquid manure well, will stay where 
placed, making it possible to keep the cows cleaner, and are 
relatively freer from dust than straw or stover. Where the 
floor is tight and smooth both sawdust and shavings can easily 
be removed. 

The amounts of the various beddings needed will depend 
upon the management, the length of time the cows are kept 
in the stable, and the nature and condition of the floor. 

The absorptive properties of different bedding materials are 
given by Doane ^ as follows: 

1 " Tests of Material for Bedding Cows," Md. Agr. Exp. Sta., Bull. No. 104, 
p. 9. 



THE COST OF BEDDING 39 

Water absorbing Pounds of bedding 

Material. power of bedding, required to absorb 

for 24 hours. 

Cut stover 2.5 4° 

Cut wheat straw 2.0 5-° 

Uncut wheat straw 2.0 5.0 

Sawdust 0.8 12.5 

Shavings 2.2 4-4 

Before making a calculation of bedding cost it is necessary 
to know the system practiced — whether the cows are kept in 
at night, or for how long each day, and the length of time on 
pasture. We may assume that they are kept in the barn 24 
hours per day for 8 months. The other four months of the 
year they would be in the barn a few hours perhaps, but 
would likely not use bedding, except a little to absorb the 
liquid manure if there were no other means of collecting it. 
The amount of bedding needed per cow per year would there- 
fore be 5 X 240, or 1,200 pounds of wheat straw, 12.5 x 240, or 
3,000 pounds of sawdust, and 4.4X240, or 1,050 pounds of 
shavings. If we assume straw to cost $5 per ton, sawdust 
$1.50, and shavings $6, we get costs for bedding with straw, 
sawdust, and shavings of $3, $2.25, and $3.15, respectively. 
The prevailing price can be substituted in particular cases. 
Rasmussen ^ says that bedding cost at the New Hampshire 
Station one-half cent per bushel for sawdust and one and one- 
half cents for handling, making a total of two cents, and that 
on the average 200 bushels are required per cow per year, 
making a total cost of $4. Minkler,^ of the New Jersey Sta- 
tion, bedded cows with one bale of shavings per 20 cows, at 
a cost of $5.30 per cow per year. 

1 N. Hamp. Exp. Sta., Ext. Bull. No. 2, p. 14. 

2 New Jersey Exp. Sta., Thirty-first Annual Report. 



CHAPTER VII 

THE COST OF SIRE 

There are two factors that determine the cost of the sire 
per cow, namely, the expense of keeping the sire and the 
number of cows served. The first cost of a bull varies greatly, 
and ranges from the cost of raising to hundreds and even 
thousands of dollars. It requires for a particular herd no more 
expenditure to raise a good bull than a poor one, but the initial 
cost is more, and if the bull has especial promise or has been 
tried and especially good animals secured, his sale price and 
also his intrinsic value may be very high. The effect of a 
sire that will get daughters with greater production ability 
than their dams is worth much to the herd that is being 
developed. From the standpoint of cost of production of 
milk of a particular generation, it is not correct to figure the 
cost of sire on the basis of an expensive animal, for a cow will 
be no better as a producer and no more economical in her 
production because of the use of a good sire in getting her 
calves. The calves are of greater value, which will increase 
the cost price of cows in the next generation. A bull that will 
be likely to give calves equal to or better than the 8,500- 
pound producers taken as a basis of calculation in a preced- 
ing chapter would cost perhaps $50 when a few days old. It 
would cost somewhat more to raise a bull to two years of age 
than a heifer, but the bull could be used some during its sec- 
ond year. It is reasonable, therefore, to assume a cost of 
$100 for the bull at i to i| years of age. The expense of 
keeping a bull is somewhat different from that of keeping a 
cow. More room is required and more be'dding is needed, 
while the feed will be somewhat less than that required by a 
high-producing cow. The taxes, interest, and insurance should 



THE COST OF SIRE 4I 

be considered on the same basis as in the case of cows. The 
depreciation is greater, because the initial cost is higher, and 
the period of usefulness in a herd is no longer, on the aver- 
age, though sometimes the bull may be sold at a price greater 
than he would bring for beef, for use in another herd. A bull 
usually is heavier and, unless old, will sell for more as beef 
than a cow. On the average, 4 years is as long as a bull can 
be used in one herd to advantage, unless a large herd is kept 
and several bulls are used. In this case the bull could be 
used with cows from other bulls. 

On the basis of $100 for the sire, the following cost per year 
must be charged as a part of the expense of producing milk: 

Feed $SO-oo 

Labor, 160 hours at $0.15 24.00 

Depreciation, $100 to $60 in 4 years 10.00 

Interest on $100 at 5 per cent S-°o 

Insurance, $100 at 0.3 per cent 3° 

Taxes, $50 at 2 per cent i-oo 

Total cost per year $90.00 

Credit for manure 2O-0o 

Net cost per year $70-3o 

The number of cows served by the bull is the greatest factor 
in the cost per cow. A bull will serve as many as 100 cows 
during the year, or even more, but in practice the service is 
not regular, although an attempt commonly is made to have 
fresh cows at different seasons. It should also be remembered 
that there are not so many or seldom as many as 100 cows in 
the herd. The greater part of the milk of this country, as 
is suggested above, is produced by small herds, and it is in 
these that the bull service is so high, especially where expen- 
sive bujls are kept. Following the table above, with a herd 
of 10 cows the service per cow would be $7.03 per year, while 
in a herd of 20 cows this cost is only one-half as much. The 
manure produced must be considered as a credit. It is not 
quite so much in value as from a cow fed for large production. 
For a bull more bedding is required; the labor is about the 
same as that required in caring for a cow. The bull usually 
is kept in a separate pen, so that more time is required to 



42 MILK PRODUCTION COST ACCOUNTS 

groom him and clean his stall, but the time spent in milking 
the cows is saved. 

The cost of the sire is greatly reduced by cooperation of 
owners of small herds. Where several farmers in a neigh- 
borhood organize and form what is known as a Bull Associa- 
tion, this burden of expense is greatly lessened. There may 
be some inconvenience in such a plan, and there is also dan- 
ger of disease being carried from farm to farm, but these and 
other apparent objections are being met, and the plan is 
destined to prove valuable in building up our dairy herds 
and in decreasing the cost of milk production. 



CHAPTER VIII 

MISCELLANEOUS EXPENSES 

On a well-equipped dairy the miscellaneous expenses are 
considerable. One or more of the items mentioned below may 
not be necessary as costs for a particular dairy. For example 
some dairies have good springs or an abundance of cold water, 
so that ice is not needed. Under conditions, however, where 
the milk must be prepared for shipment in a short time, ice 
may be needed, even where there is a good supply of cold 
water. In some sections ice can be stored at a small cost, 
while in other sections it is necessary to buy ice at relatively 
high prices. According to Rasmussen ^ about one ton of ice 
is needed per cow per year to cool the milk of an 8,500-pound 
producer, this being the amount produced by the cows in the 
Wisconsin herds to which these formulae have been applied. 
This makes a rather large item under conditions of high cost 
of ice, but the amount cooled is more than twice the produc- 
tion of the average cow. The actual cost of ice in the 174 
herds of Delaware County, New York,^ was only about $.50 
per year per cow. More than one-half the dairies of this 
country use no ice at all. Supplying wood and coal for heating 
water and for steam where sterilizers are used adds another 
annual expense item of 25 to 75 cents per cow. 

Tools and special equipment such as scales, curry combs, 
brushes, cards, clippers, forks, shovels, and carts and carriers 
constitute another expense, which will amount to 50 cents to 
$1 per head on a well-equipped dairy. The utensils needed, 
including pails and strainers, steriUzers, cans, and other tin- 
ware, will cost about $1 per year per cow. Supplies such as 
medicine, salt, soap, disinfectant, and fly exterminator cost 

1 New Hampshire Exp. Sta., Ext. Bull. No. 2, p. 15. 

2 New York Agr. Exp. Sta. (Cornell), Bull. No. 364, p. 133. 



44 MILK PRODUCTION COST ACCOUNTS 

from a few cents to $i or more per cow. In surveys in New 
Hampshire Rasmussen ^ found that medicine alone amounted 
to about 45 cents per cow. 

Another incidental expense is that for veterinary services 
and for the supervisor of cow-testing associations where such 
are used. On the average dairy the dairyman should be able 
to handle ordinary diseases and should seldom be obliged to 
call a veterinarian. An occasional visit from a veterinarian 
is, however, necessary. The supervisor of a testing association 
does a necessary work in herd management and can usually 
do it cheaper and better than the dairyman. The cost of this 
service depends upon the size of the herd. An average charge 
of $1.50 per cow per year will cover it in most localities, while 
the veterinary fees ought not to exceed 50 cents to $1 per 
year per head. 

Where the milk must be delivered to a station or creamery, 
or even to a city, which involves the expense of hauling and 
railroad transportation, a very material expense is incurred. 
In the investigation of conditions in New England by the 
Boston Chamber of Commerce ^ the average cost of collect- 
ing and hauling to the station was about one-half cent per 
quart, while the cost of railroad transportation on different 
lines averaged about the same. With the 8,500-pound pro- 
ducers the cost of hauling and transportation at these rates 
would be over $18 per year per cow. Long hauls with small 
quantities of milk in some cases are made at a cost that makes 
the milk business unprofitable. Cooperation in hauling greatly 
reduces the cost to small producers. In studies by Hopper 
and Robertson ^ the average cost for delivery of 100 pounds 
of milk was 11.7 cents, with an average hauling cost of $145.16 
per farm per year. 

This, although another item of legitimate charge to the cost 
of production of milk, in some cases is not a real extra cost. 
Often the country boy delivers a can or two of milk on his 
way to school, so that although an actual expense would 

1 New York Agr. Exp. Sta. (Cornell), Bull. No. 364, p. 133. 
^ " Investigations of Milk Situations in New England." 

2 New York Agr. Exp. Sta. (Cornell), Bull. No. 357, p. 151. 



MISCELLANEOUS EXPENSES 45 

otherwise be required to deliver the milk, it is done in this 
way at no real cost. The total of $18 for hauling seems high, 
but it is a reasonable charge. At 11. 7 cents per hundred, 
hauling 8,500 pounds of milk costs $9.80, leaving about $8 
for railroad transportation. When this is paid at the farm 
this item should be considered in determining the price at 
which the milk should be sold. 

All these costs may be brought together as follows: 

Ice, I ton at $1 $1.00 

Wood and coal 75 

Utensils i.oo 

Supplies 1.00 

Veterinary service and tester 2.50 

Hauling and transportation 18.00 

Total miscellaneous expense $24.25 

These items cover conditions above the average, but no 
better than are necessary for the production of high-grade 
milk such as is now being demanded. Most farms use no ice, 
no wood or coal for steam, and no sterilizers. The items of 
tools, utensils, and supplies may be reduced in some cases, and 
the cow tester is not an expense on most farms, although with 
this service the cost would in most cases be returned many 
times by the increased efl&ciency of the herd. Not only do 
the records of the supervisor of the cow-testing association 
show the profitable and unprofitable cows, but the tester is a 
great help in the selection of calves to be used in future herds, 
thus making intelligent breeding and herd improvement pos- 
sible. The large item of $18 for hauling and transportation 
should be deducted if the milk is sold at the farm and is 
received there by the dealer. 



CHAPTER IX 

CREDIT FOR CALVES AND MANURE 

It is difficult to determine an average credit for calves, as 
they range in value from almost nothing to $50 or more when 
born. The calves that can be sold for the high prices, of 
course, add an expense to production, namely, the cost of 
phenomenal breeding stock with very highly bred, high pro- 
ducers. The added expense of caring for such animals, the 
expense of advertising and selling, and the great increase in 
depreciation and risk must all be included when the larger 
credit for calves is allowed. It is assumed for present pur- 
poses that the primary business is the production of milk. 
From an ordinary milk herd the calves usually are sold as 
veal. The number of calves to be credited to the herd each 
year will not exceed four-fifths of the number of milch cows, 
and when failures to breed, accidents, and deaths of calves 
are considered, the number to be disposed of will not average 
more than three-fourths of the number of cows in the herd. 
Some calves must be kept to replace the cows, which, it has 
been estimated, must be replaced on the average every fifth 
year. This gives a credit per cow of three-fourths of the price 
at which calves are worth in initial cost. The one-fourth is 
not credited to the cows, for no charge is made as the initial 
cost of the calves raised. When all the calves are credited to 
the cows, the initial cost must be included in the calculation 
of cost of cows. 

The price at which a dairy calf can be sold when the milk 
of a cow becomes normal, usually in three or four days, is in 
most instances very small. For veal, a large calf when fed 
and marketed at best advantage may bring a price that will 
warrant the expenditure of $5 to $6 and in exceptional cases a 
little more for raising, but many calves do not pay for the 



CREDIT FOR CALVES AND MANURE 47 

milk consumed and the labor invested in them. With a fair- 
sized cow, such as is assumed in this discussion, an average of 
$4 per calf is a fair sale price, and if fed 6 weeks the value 
of the calf for veal would likely not warrant an initial charge 
of more than this. Three-fourths of this gives a credit of $3 
per year for each cow in the herd. Under conditions prevail- 
ing in many sections the demand for heifer calves from cows 
as good as the standard assumed herein would command as 
much as $10, but of the three-fourths that could be sold about 
one-half would be male calves, so that the credit possible 
under these conditions would add but little to the credit per 
cow allowed above. 

The actual value of the manure produced by dairy cows 
depends upon the kind of concentrates and roughage fed, the 
nature and condition of the soil, and the productive value of 
the land and the value of the crops grown. In cost estimates 
various methods have been used to calculate the credit to be 
allowed each cow for manure, and values of $8 to $36 are 
given. Perhaps the most commonly used figure is $15. Ras- 
mussen ^ arrives at this figure by assuming that 13 tons are 
produced and the fertilizing value of fresh manure is $1.90 
per ton, making a total value of $25. From this he deducts 
two-fifths for hauling and loss due to leaking and fermenting. 
The cows, however, should not be charged for careless hand- 
ling of manure, but should be given credit for it to the limit 
of practical methods of conserving the material. Rasmussen, 
like most other authors, bases the value of the manure upon 
the cost of mineral fertilizers required to furnish the fertiliz- 
ing elements in similar amounts. If the land of a particular 
dairy needs these elements, and if they must be purchased in 
the form of mineral fertilizers where not supplied by the 
dairy, 'the method of basing the value of the manure on the 
cost of the commercial fertilizers needed to supply the same 
quantity of the fertilizing elements is correct. The humus 
furnished by manure is of considerable value on some fields, 
while others seem to produce as well with commercial fertil- 
izers when a proper rotation is followed and green crops are 
1 New Hampshire Exp. Sta., Ext. Bull. No. 2, p. 16. 



48 MILK PRODUCTION COST ACCOUNTS 

turned under. The value of manure is thought by some to be 
overestimated when based on the fertiHzing elements it con- 
tains. When the full amount is credited at cost price of the 
elements and the cows are fed a heavy grain ration, a large 
figure for manure is obtained. In an experiment by Roberts ^ 
in which i8 cows were kept in the stable and given a fairly 
liberal ration the results indicated in the table below were 
obtained. The liquid manure is included. The value is based 
upon a price of 7 cents per pound for phosphoric acid, 15 
cents for nitrogen, and 4.5 cents for potash. 

18 cows for Average for 

one day. i cow per day. 

Weight of cows, pounds 20,380 i>i32 

Food consiuned, pounds i,347 75 

Water drank, pounds 876 49 

Total excretions, pounds 1,452.5 81 

Nitrogen, pounds 7.35 .41 

Phosphoric acid, pounds 5.01 .28 

Potash, pounds 7.40 .41 

Value of nitrogen $1.10 $ .06 

Value of phosphoric acid 35 .02 

Value of potash 33 .02 

Total value $ 1.78 $ .10 

Value per ton $ 2.27 

Value per animal per day 093 

Value per 1,000 pounds live weight per day. . .082 
Value per 1,000 pounds live weight per year. $29.82 

From this must be subtracted the cost of hauling the ma- 
nure to the field. At 50 cents per ton ^ and on a basis of 12 
tons, the deduction is $6, leaving the value for manure as 
about $23. Some loss takes place even under the best known 
system of handling manure, but the value of the humus and 
the straw used for bedding is not charged. The amount ^ 
and kind of grain fed to the cows is a factor in manure value, 
feeds high in protein making more valuable manure. A sum- 

^ New York Agr. Exp. Sta. (Cornell), Bull. No. 27. 

^ " Cost of applying manure," Minn. Agr. Exp. Sta., Bull. No. 145, p. 48. 

^ The Feeding of Crops and Stock," A. D. Hall, p. 234. 



CREDIT FOR CALVES AND MANURE 49 

mary of studies in the manurial value of excreta of milch cows 
by Sweeter^ shows the relation of feeding to manure value: 

1. "The feces from milch cows contains | of the nitrogen, J of 
the phosphoric acid, and | of the potash of the food. 

2. "The urine contains | of the nitrogen, almost no phosphoric 
acid, and | of the potash of the food. 

3. "The milk contains less than | of the nitrogen, j of the phos- 
phoric acid, and ■^\ of the potash, or less than 5 of the manurial 
value of the food. 

4. "When the urine is allowed to waste, more than J of the 
food, or 63 per cent of the manurial value of the solid and liquid 
manure is lost." 

Another method is to compute the value of manure on a 
basis of increase in the value of crops. In farm management 
studies by the U.S. Department of Agriculture ^ this plan is 
being followed. The average value of the crops, corn, pota- 
toes, wheat, oats, and hay on well-stocked farms in Pennsyl- 
vania is given as $15.80 per animal unit more than on similar 
farms with few animals. The animal unit, however, includes 
animals other than dairy cows, which supply more fertility 
than any other domestic animals. In similar studies in Mich- 
igan the corresponding figure has been estimated as $8.22. 
The difference is accounted for by the greater need for mineral 
matter in the Pennsylvania soil and by the better care given 
manure in Pennsylvania because of its higher value. This 
difference shows that the value depends upon conditions and 
needs of the soil of the dairy farm, and must to a large extent 
be calculated with respect to each particular case. The in- 
crease in crop value, however, usually is underestimated when 
long periods of time are considered. Under conditions where 
cows are well supplied with concentrated feeds and where the 
manure is properly cared for, a cow of 1,000 pounds weight 
will furnish $20 worth of added fertility per year. The prac- 
tice in England,^ which is covered by a law affecting landlord 

^ Penna. Agr. Exp. Sta., Bull. No, 54, p. 7. 
2 U. S. Dept. of Agr., Professional Papers, Bull. No. 341, p. 96. 
^ Jour. Royal Agr. Soc, 193, Reported in Jan., 1915. Jour. Board of Agr., 
pp. 931-934. Also " Feeds and Feeding," Henry and Morrison, p. 277. 



50 MILK PRODUCTION COST ACCOUNTS 

and tenant, gives a tenant credit for all manure resulting 
from purchased feeds given to stock, on a basis of f of the 
total value of the phosphoric acid and potash in the feed, 
allowed for all unused manure. A credit of 70 per cent of the 
total value of nitrogen is allowed when the stock is fed on 
pasture, and of only 50 per cent when it is fed in the barn- 
yard. When one crop has been grown after application of the 
manure, a credit of one-half the above amounts is allowed. 

There are tables in the English publications referred to 
above giving the amounts of nitrogen, phosphoric acid, and 
potash voided from the various grains fed to dairy cows. 
Given the quantities of feed consumed and the prices for the 
elements needed on a particular farm, the real value of ma- 
nure under particular conditions of soil and feeding can be 
definitely ascertained. 



CHAPTER X 

APPLICATION AND USE OF FORMULA 

The costs and credits incident to milk production may now 
be summarized. Under the conditions stated for each item, 
which include a particular size and kind of cow, producing 
8,500 pounds of 4 per cent milk with feeds at stated prices, 
with the system of management given, and with a good barn 
well equipped for the production of high-grade milk, cost 
records will show the following as actual costs in the production 
of milk: 

Total Cost. 

1. Feed $75-2^ 

2. Labor 27.00 

3. Buildings 8.24 

4. Cattle 9.21 

5. Bedding 3.25 

6. Sire 3.51 

7. Miscellaneous expenses 24.25 $150.75 

Credits. 

1. Calves $ 3.00 

2. Manure 20.00 23.00 

Net cost per cow per year $127.75 

The average standard of production of these cows is as- 
sumed as 8,500 pounds per year, which was also the average 
production of the 985 Guernsey cows used in the Wisconsin 
test, upon which the data in this study are based. Figuring 
2.15 pounds to the quart, the production is 3,441 quarts. 
Thus the cost of production per quart is about 3I cents. The 
cost of 100 pounds, therefore, is $1.50. The Shefl&eld farms, 
Slawson-Decker Company, New York,^ perhaps the largest 
independent milk company in the United States, recently an- 
nounced its price schedule for milk as follows: 

1 New York Frodttce Renew, American Creamery, p. 975. 



52 MILK PRODUCTION COST ACCOUNTS 

Months. 1916. 1915- 

April $1.70 $1.75 

May 1.40 1.40 

June 1.40 1.40 

July 1.60 1.50 

August 1.75 1.65 

September 1.80 1.75 

This is for milk testing 4.5 per cent, which is one-half per 
cent less than the standard used herein in calculating feed 
cost. They, however, allow a premium of 4 cents per hundred 
pounds for each one-tenth per cent butter-fat above 4.5 per 
cent. Five per cent milk would be paid for at a rate of 20 
cents more per hundred. Still further premiums are offered 
for milk of Grade A, which are provided for in these cost 
calculations in preceding pages. The winter prices are pre- 
vailingly higher, but the production then is less. The average 
price of milk of Grade A, testing 5 per cent, in New York is 
$2 per hundred pounds. In some sections this price is less. 

It should be further pointed out that the prices for feeds 
are somewhat lower than prevail at the present time. At 
prevailing prices for feeds the costs would be increased to 
$90.49, and the total costs to $143.36, and the profit per cow 
may be determined as follows: 

Sale price of 8,500 pounds of milk $170.00 

Cost of production of 8,500 pounds of milk 142.95 

Profit per cow $27.05 

In a 20-cow dairy the profit for the year on this basis is 
$532.80, in addition to an income of 5 per cent for all capital 
used in the enterprise. The assumed total capital invested is 
about $9,000. When the disease risk to the animals is con- 
sidered, the profit under these conditions is not great, though 
satisfactory. 

For the standard herein, however, unusually high-producing 
cows were selected. The average production of the cows of 
the United States is only about 3,000 pounds. Animals of 
this sort present a very different outlook for the business. 
We may assume that cows of this standard are used to supply 
milk to the same market, that is. Grade A. By referring to a 



APPLICATION AND USE OF FORMULA 53 

preceding chapter we find the food for maintenance would be 
the same, and for 3,000 pounds of milk is as follows: 

Protein. Energy. 

Maintenance, 5 x 280 = 140 6 x 280 = 1,680 

3,000 pounds milk, 962 X 3,000 = 186 .36 X 3,000 = 1,080 

Total amount needed 326 2,760 

Supplied by hay 90.89 583-63 

Supplied by silage 61.60 1,159.20 

Total amount supplied 152.49 1,742.83 

To be supplied by grain i73-5i 1,017.17 

A ration of a ratio of 1:6 would supply this need. Using 
the same feeds in slightly different proportions to give the 
needed balance of i to 6, the following amounts of feed would 
be required by cows of this production: 

Feed required, with costs. 

1,680 pounds of hay, at $.80 per 100 $1344 

7,000 pounds of silage, at $.15 per 100 10.50 

450 pounds of corn, at $1.00 per 100 4.50 

300 pounds of dist. grains, at $1.50 per 100 4.50 

300 pounds of bran, at $1.50 per 100 3.15 

300 pounds of oats, at $1.10 per 100 3.30 

Pasture for season, at S5.00 5.00 

Total cost of feed for the year ^44-39 

The cost for feed, therefore, would be $30.90 less per year. 
The cost of labor, buildings, and bedding, and miscellaneous 
expenses would be the same, while the cost of sires and cows 
would be decreased only by the initial cost of the latter, which 
would only decrease the cost per unit cow by a few cents. 
The cow would cost as much to raise, but if purchased could 
be obtained for a lower price. The total annual cost, then, 
to keep cows of this kind would be $97.26. The milk at the 
same price of $2 per hundred pounds would bring $60, which 
would make a loss of $37.26 per cow per year. This is what 
may be expected at present prices of feed and labor from 
cows that produce no more than the average cow of the United 
States, when a dairyman attempts to produce milk of good 
grade, in good barns, using full grain rations, and practicing 
year-round feeding. 



54 MILK PRODUCTION COST ACCOUNTS 

A further analysis may be made: Let us assume that the 
cows are kept in a building worth only $i,ooo, that the cattle 
are kept on pasture and fed chiefly straw and stover during 
the winter, that the bedding could not be marketed, that much 
of the hay could not be sold at $i6 per ton on account of 
being damaged by rain, that the equipment is relatively in- 
complete and inexpensive; also assume that the cows are fed 
less grain, producing most of the 3,000 pounds while on pas- 
ture, and only given stover, straw, and perhaps a little grain 
in the winter. The item of labor under this system would be 
less. Under these conditions the annual cost of keeping cows 
could be decreased to $60, or the sale price of the milk. Some 
dairymen would continue under these conditions for the pay 
of $27 per cow per year for labor. 

With the data in the preceding chapters comparisons can 
be made of each item of cost, so that they may be taken as 
a guide to cost under any condition of management or prices. 

An application of the formula warrants the following con- 
clusions: 

1. Under present prices of feed and labor a herd of high- 
producing cows will when properly managed return 5 per cent 
interest on the capital invested in a good plant, and an addi- 
tional 5 per cent for services of the manager not included in 
regular labor charge. 

2. The average cow of the United States does not produce 
enough milk to pay the cost of production when managed 
under the same conditions and equipped to produce high-grade 
milk. 

3. Where the herd uses feeds that can not be marketed, 
where a cheaper system of management is used, and where the 
cows are housed in cheaper buildings and given less care, they 
may pay the cost of production of milk. 

4. Under some conditions, summer dairying would be more 
profitable than the all-year practice. 

5. It does not pay to use intensive methods or winter grain 
feeding with low producing cows. 

6. The value of pasture for dairy cows has been under- 
estimated. 



BIBLIOGRAPHY 

Cost Accounting, Theory and Practice, J. L. Nicholson. 

Factory Costs, Frank E. Webner. 

Cost Accounts, L. W. Hawkins. 

Accounts, W. M. Cole. 

The Science of Accounts, H. C. Bentley. 

Accounting Practice, C. M. Day. 

Formula for Costs, L. E. Ashley, System, 27:92-3, Jan., 1915. 

Simplified Cost Accounting for Manufactures, W. B. Palmer, Ann. 

of the Amer. Acad, of Sci., 61: 165-73. 
Fixing Manufacturers' Costs; How German Manufacturers Pre-Cal- 

culate Costs, R. Grimshaw, System, 24: igi-S- 
Taking Factory Costs Apart, C. B. Thompson, System, 23: 131-7- 
The Applied Theory of Accounts, P. J. Esquerre. 
Accounting Practice and Procedure, A. L. Dickinson 
A System of Farm Cost Accounting, C. E. Ladd, Farmers' Bull. 

No. 572, 1914. 
Farm Accounts, J. A. Bexall, School of Commerce, Oregon Agr. 

College. 
Cost and Its Significance, Herbert Joseph Davenport, Amer. 

Econ. Rev., Dec, 1911, v. i: 724-52- 
Cost Accounting, 'i. R. Wildman; 100 pp. 
Factory Administration and Accounts, E. T. Elbourne, 1914; 638 

pp. 
Depreciation, Reserves, and Reserve Funds, Dicksee. 
Distributing Overhead Expenses, N. T. Ficker, Eng. Mag., 49: 321-6. 
What Constitutes Overhead, E. H. Fish, Eng. Mag., 49: 488-97- 
F arm' Bookkeeping, E. H. Thompson, Farmers' Bull. No. 511, 1912. 
Farming on a Business Basis, J. M. Oskinson, System, 23:379-83. 
Farm Manageynent, Warren. 

Production Factors, A. Hamilton Church; 188 pp. 
Studies in Cost of Production, No. Dak. Bull. No. 91. 
Cost of Production of Farm Products, W. M. Hays and E. C. Parker, 
Minn. Bull. No. 97, 1906, p. 90. Minn. Bull. No. 117, 191°. 
p. 69. 



56 MILK PRODUCTION COST ACCOUNTS 

The Cost of Producing Farm Products, Univ. of Minn. Bull. No. 96. 
The Cost of Producing Farm Products, Thomas P. Cooper, Univ. of 

Minn. Bull. No. 124. j-^ 

Cost of Producing Minnesota Farm Products, Y. W. Peck, Univ. of 

Minn. Agr. Exp. Sta., Bull. No. 145. 
The Cost of Production on Missouri Farms, Mo. Agr. Exp. Sta., 

Bull. No. 125. 
Price of Products, Henry C. Taylor, Univ. of Wise, pp. 136-51. 
Cost of Producing Dairy Products, T. P. Cooper, Minn. Bull. No. 

124, June, 1911, pp. 89-188. 
The Production and Consumption of Dairy Products, U.S. Dept. of 

Agr., Bull. No. 177. 
Sanitary Control of Milk Supply, Ernest J. Lederle; Survey, 27: 

1034. 
Cost of Producing Milk, Fred Rasmussen, Ext. Bull. No. 2, N.H. 
Cost of Milk, Survey, 30, p. 386. 

The Cost of Milk Production, N.Y. Exp. Sta., Cornell, Bull. No. 357. 
The Cost of Milk Production, Mass. Agr. Exp. Sta., Bull. No. 145. 
Memo, of Some Estimates Made by Various Authorities on the Pro- 
duction of Meat and Milk, Statis. Soc. of London, v. 65 and 

v. 67. 
Cost of Producing Milk on 174 Farms in Delaware County, N.Y., 

New York Exp. Sta., Cornell, Bull. No. 364. 
The Cost of Producing Milk, Larson, Proceedings of the Agr. Conf. 

held by Corn Exchg. Nat. Bnk., Phila., 1913. 
Investigation and Analysis of Production, etc., of Milk and Cream in 

New England, Boston Chamber of Commerce, 191 5. 
Extra Cost of Producing Clean Milk, Circ. 170, Bur. of Animal Ind., 

U.S. Dept. of Agr. 
Practical Lesson for the Management of the Dairy Herd, Univ. of 

Wise, Bull. No. 217. 
The Milk Question, M. J. Rosenau. 
Milk Question, Ind., 74: 445. 
What Does Milk Cost, Ind., 74: 1208. 
North Carolina Dairy Herd Records, N.C. Bull. No. 184. 
Transportation of Milk, Sci., N.S., 38:375. 
Freight and Prices of Milk, Milk Reports, Oct., 191 5, p. 16. 
Production and Handling of Clean Milk, Kenelin Winslow, 
Milk Supply, Karlsruhe, George Berg, v. 58 and v. 140. 
Municipal Milk Supply of Germany, Sci. Amer., 72:40-1. 
Regulation of Milk Trade in Prussia, Am. City, 8: 201, 



BIBLIOGRAPHY 57 

Milk Supply, Health of City, Godfrey Hallis, 30-57. 

Milk Supply, Minn., Wise, C. J. Crane, pp. 85-116. 

Future of Milk Industry, Am. City, 9: 357. 

Sanitary Milk Supply of Rochester, C. J. Crane, 32-47. 

Milk Supply of New York City, E. J. Lederle, and Russell 

Raynor. 
Clean Milk Supply, N.Y. State Health Dept. Conf. on Infant Wel- 
fare, 1913, pp. 194-5- 
Clean Milk in New York City Conference, 1906. 
Select Committees of Board of Health, New York, 1858. 
Report on Milk Standards, Am. City, 9: 358. 
Clean Milk and Public Health, Jesse D. Burke, Ann. Amer. Acad. 

Pol. and Soc. Sci., v. 37, p. 436. 
Investigation of Milk Business in New York City by Attorney General, 

Sen. Doc. No. 45, State of N.Y., 1909. 
Conference of Milk Commission on Milk Problems, 1910. 
Milk Depots in New York City, Milk Commission Report. 
Report of the Committee on Markets, Prices and Costs of the New 

York State Food Investigating Commission, Aug. i, 1912; 77 pp. 

Part of Sale Price the Farmer Gets. 
Clean Milk, S. D. Belcher. 

Fight for Clean Milk, W. H. Allen, Civics and Health, 252-67. 
Milk Analysis and Examination, Carl Olaf Jensen. 
Solution of Milk Problem, in Diseases of Milk, Nathan Straus, 

1914, pp. 89-95. 
Phila. Milk Comm. Rept., 191 1. 

Milk Problem in Child Problem, G. B. Mangold, pp. 67-79. 
Milk Problem in St. Louis, Wash. Univ. Sch. of Soc. Eco., Rept. 

No. I, 1914. 
Prices of Milk, etc., Bur. of Statistics, U.S. Dept. of Agr., Jan., 1910. 
Interstate Conference to Fix Milk Prices, Survey, 29-836. 
Three Months in the London Milk Trade, Eco. Rev., 4. 
Fight with the Milk Trust, Country Life, 23, pp. 53-5. 
Amer: Assn. of Medical Milk Commissions Reports. 
Cost of Living and Food Prices, N.Y. Mayor's Market Com. Rept., 

1913- 
An Attempt to Regulate Selling Prices, Eco. Rev., v. 4, 1894. 
Factors Affecting Commodity Prices, Roger W. Babson, Ann. Amer. 

Acad, of Pol. and Soc. Sci., v. 38, 191 1, pp. 473-506. 
Cost of Food Products, J. B. Weaver, Jr., Harper's Weekly, Mch. 

26, 1910, v. 54: 6. 



58 MILK PRODUCTION COST ACCOUNTS 

The Cost of Living, Discussion, E. F. McSweeney, S. H. Barker, 

and T. N. Carver, Amer. Eco. Rev., March, 1912, Suppl., 

V. 2: 109-16. 
Living Expenses of Other Days, Harper's Weekly, April 2, 1910, v. 

54, P- 32. 
Cooperation and Cost of Living in Certain Foreign Countries, Mes- 
sage of the Pres. of the U.S., Taft, 62d Cong., 2d Sess., House 

Doc. 617. 
Increase in Cost of Food and Other Products, U.S. Bur. of Labor, 

1910. 
Value and Distribution, Univ. of Chicago Press, 1908, 582 pp., 

H. J. Davenport. 
Causes of the Rise of Prices, Contemporary Review, Oct., 191 2, v. 

102, pp. 483-92. 
The Cost of Living, A. J. Nock, Titusville, Pa., Am. Mag., June, 

1910, V. 70: 282-3. 
High Cost of Living, John A. Keliher, Speech in House of Reps., 

June 16, 1910, Cong. Rec, 6ist Cong., 2d Sess. 
Report on Cooperation and Marketing, Agr. Coop., pt. i, Ohio State 

Board of Public Affairs. 
Report of U.S. Ind. Commission, 1900, v. 6, Dist. and Dis. of Food 

Products. 
Comm. on Cost of Living, Ind. No., etc.. New Zealand. 
Price Maintenance, Thomas A. Fernley; 311 pp. 
An Introduction to the Study of Prices, W. T. Layton. 
Movements in Prices, Mayo Smith, Jour, of Pol. Eco. (?) 
Prices and Index Numbers, Jour, of Pol. Eco., 1900, v. 8, pp. 171- 

202; by R. S. Padon. 
The Demand and Supply Concept, R. F. Hokie, Thesis, Chi., 1906. 
The Farmer Not to Blame for High Prices, H. O. Sharp, Harper's 

Weekly, May 7, 1910, v. 54: 6. 
How Food Prices are Made, Allen L. Benson, Pearson's Mag., 

May, 1910, V. 23: 701-8, 30, 32. 
The Laboring Man To-day as Compared with Fifty Years Ago, New 

Eng. Mag., March, 1910, N.S., v, 42:81-7. 
Gambling in Food, R. J. Abernathy, Outlook, Aug. 13, 1910, v. 

95: 849-50. 
Real Reason for High Prices, Samuel Hopkins Adams, Cosmo. Mag., 

Sept., 1910 V. 49:460-5. 
When Does a Food Become a Luxury, E. H. S. Bailey, Pop. Sci. 

Mo., Dec, 1910, V. 77:590-3. 



BIBLIOGRAPHY 59 

Farmers' View of Prices, W. I. Chamberlain, Outlook, Jan. 7, 191 1, 

V. 97:45- 
Advance in Prices of Farm Products During the Period from i8g6 to 

jgii, Reed Smoot, Statement presented to Senate Aug. 26, 

191 2, Cong. Rec, 62d Cong., 2d Sess. 
Farm Manure, Economic Value, N.Y. Bull. No. 94, N.S., 1895, 324, 

E.S.R. V. 7:853. 
Farm Manures, Nature and Value, Me. Bull. No. 126, 1906, 45-8. 
Farm Manure, Value and Use, Ky. Bull. No. 140, 1909, p. 81, 
Tests of Materials for Bedding Cows, Md. Bull. No. 104. 
Composition of Mamire, E. B. Voorhees, New Jersey Rept., 1900, 

p. 88. 
Composition of Cow Manure, Mixed and Separate, with Different 

Feeds, Voorhees, N.J. Rept., 1901, p. 144. 
Value of Manure per Ton, N.Y. Exp. Sta., Cornell, Bull. No. 56. 
Manure Production, Ala. Bull. No. 114, 1901, pp. 68-72. 
Manure Production, N.Y. Exp. Sta., Cornell, Bull. No. 56, 1893, 

P- 157- 
Value of Manure and Manurial Value of Feeding Stuffs, Mass. Rept., 

1888, p. 116. 
Manure Production and Use, Minn. Rept., 1887, p. 160. 
Barnyard Manure Value, N.Y. Rept., 1889, pp. 23-4. 
How to Use Manure with Fertilizer, Ohio Bull. 221. 
Digestion Experiments with Dairy Cows, Harry Snyder, Minn. Bull. 26. 
Manure Production from Cows and Steers, Ohio Bull. 183 and Bull. 

246, 1907 and 1912. 
The Manurial Value of Excreta of Milch Cows, W. S. Sweeter, 

Penna. Sta. Bull. No. 54, p. 7. 
Cow Manure, I. P. Roberts, N.Y. Exp. Sta., Cornell, Bull. No. 27, 

1891. 
Manure from Cows, Value and Amount, N.Y. Exp. Sta. Rept., 1889, 

pp. 150-3. 
Manure from Cows, Minn. Bull. No. 26, Jan., 1893, pp. 14, 18, 22, 

26, 28, 31, 32. 
Value of Manure from Milch Cows and Constituents Removed from 

Farm in Milk, Conn. Sta. Rept., 1889, pp. 116-20. 
Manure from Six Cows, Fla. Bull. No. 7, 1889. 
Value of Cows' Manure per Day and per Year, N.Y. Exp. Sta., 

Cornell, Bull. No. 27, 1900, p. 88. 
Value of Fresh Cow Manure and after 70 Days' Exposure, N.J. 

Rept., 1900, p. 88. 



6o MILK PRODUCTION COST ACCOUNTS 

Cow Excreta, Manurial Value, Pa. Rept., 1900, pp. 321-51. 

Cow Excreta, Value of, Pa. Rept., Bull. No. 54, Nov., 1900, p. 7. 

La Question du ble. La Grande Revue, May 10, 1911, v. 67: 129-47. 

Die Steigerung der Preise, Jahrbuch filr Gesetzgebung, Verwaltung 
und Volkswirthschaft, 1911, v. 35: 1-29. 

Grendriss der Milch Kunde und Milchhygiene, C. E. Jensen. 

Produktionskostenberechungen, Archil) Fur Exakte Wertschafts- 
forschung, Erg., 7. Pauli. 

Statistische untersuchung uber konsumption und produktion der milch 
und deren produkts in Darmstadt und dersen umberling Darm- 
stadt, iSgy, Philipp Jort, Ph.D., Dissertation at Giessen, 
Ger., Univ. 



VITA 

Carl William Larson was born at Saint Ansgar, Iowa, May 
29, 1 88 1. He received his elementary education in the pubHc 
schools of that city. In 1899 he graduated from the business 
department of the Saint Ansgar Seminary. He received the 
degree of Bachelor of Scientific Agriculture from the Iowa 
State College in 1906. During the next year he was entered 
as a graduate student in the same institution. From 1907 to 
the present time he has taught dairying at the Pennsylvania 
State College. Several months of 191 1 were spent in study in 
the dairy countries of Europe. He received the degree of 
Master of Science from the Pennsylvania State College in 
1913. Since that year he has been professor in charge of the 
Department of Dairy Husbandry. He entered Columbia 
University as a graduate student in 191 5. 

His pubHcations, besides several circulars and special articles 
for agricultural and dairy periodicals, are: '' A Study of Penn- 
sylvania Butter," Bull. No. 93, Pennsylvania Experiment Sta- 
tion; " Commercial Tests for Moisture in Butter and the Taylor 
Absorption Process for Making Butter," Report of the Penn- 
sylvania State College, 1909-10; " Profitable and Unprofitable 
Cows, Cooperative Cow Testing," Extension Circular No. 43; 
and, jointly with Professor F. S. Putney, " Nitrogen Studies with 
Dairy Cows in Milk," Report of the Pennsylvania Agricultural 
Experiment Station, 1914-15. 



LIBRPIRY OF CONGRESS 



000 891 189 7 



